tv C-SPAN Weekend CSPAN May 21, 2011 2:00pm-6:15pm EDT
future. so we'll put significant time and energy to develop alternative fuels and renewable energy. thirdly, efficiency. how we can power our economy using these resources. it is around those three buckets that the president's energy blueprint has created the framework for us moving forward for america's energy future. the president recently made an announcement of major initiatives we have under way. i want to quickly review them. firstly, with respect to alaska -- the conversations with senator mrkowski -- murkowski others who are interested in what we're doing in alaska all the time. we're trying to deal with some of the difficult permitting issues there. the deputy secretary and myself
and others have been personally involved in these issues. secondly, the president announced we would be opening sales in the gulf of mexico by june 30 of next year. that is money 2007-2012 plan expires. we are looking for four additional lease sales in the gulf of mexico. third, we want to create new incentives to move forward with oil and gas production. we have ideas that you have. for example, we have the leasing given now under an mandatory 10-year term. we believe with flexibility in the outer continental shelf, we could reduce lease terms and incentivize a more rapid development.
fourth, lease extensions. we recognize the work impacts to the oil and gas in the gulf of mexico, as well as in alaska as we move forward to develop safer oil and gas regulations and oversight in the government. the president away support for a lease extension directly impacted by the events of the deepwater horizon last year. fifth, there is a are believed that there is a need to do better coordination in terms of oil and gas resources, and we're taking those actions within our administrative authority at this point in time. let me move quickly to this review. a few things from the lessons of the deepwater horizon. the deepwater horizon was a national crisis.
in my view, those of us who were here in washington working on the issues in the gulf -- let's not forget the lessons from the deepwater horizon. in some ways, the national crisis had is working on an emergency basis for 40 days, dealing with that issue. it does not seem like it was that long ago. april 20. it was 13 months ago. so, as we move forward, and the events of the australian oil spill -- it should be a stark reminder to all of us that we need to move forward with safe oil and gas production in america's oceans. that is exactly what we've been doing in the department of the interior. we've been meeting, with the support of the president to look
at state oil and gas drilling. even as we have moved forward with oil and gas drilling, it is important to recognize our policy in terms of supporting oil and gas development, including in deepwater, is a policy that has not changed. we have moved forward with oil and gas drilling in deep waters of the gulf of mexico and are looking at other places where we can develop oil and gas resources safely in america's oceans. we have been -- we want to make sure that the lessons of the deepwater horizon develop a regulatory regime in the united states that does everything possible to avert the kind of oil spill we saw last year. in that vein, deputy secretary mwich and director brow
have led the initiative. we're also cognizant of the fact that effects in the gulf of mexico will have an effect around the world. the gulf of mexico is one of pond and we share that with the nation of mexico. we have worked together to create one standard, one set of protocols for the gulf of mexico and the development of oil and gas and hopefully will reach agreements with respect to boundary issues that are very important for the united states, as well as for mexico as we deal with the gulf. we've taken the initiative to ensure all the arctic nations, including russia and all of the
nations that share the arctic, are sharing best practices and resources as opportunities arise with respect to oil and gas to deal with the opportunities in the arctic. and finally, in other places around the world, i have been in brazil, where we are working with the brazilians to learn from their experience as far as going into those reserves. i expect to have more significant findings in the western hemisphere, and hopefully we will be able to develop those oil and gas resources in the future. that is all part of an effort to make sure we are supplying the sources for oil and gas we have here in this country. we hosted an international forum where we had 11 countries and the european union participate. what we were doing is began a
dialogue with the other countries around the world to make sure they, too, are moving forward with the development of the gold standard with oil and gas development. the oil and gas industry is an important issue. the same companies that operate in the gulf of mexico operate in places like russia and angola. that is why we need to make sure we are sharing those standards with the rest of the world. in our testimony today, we have outlined some legislative principles on behalf of the administration. i want to quickly review those. the first is, we ask the support and help of congress with respect to his of -- incentivizing more prompt development for oil and gas. i would just quickly note, the mineral leasing act requires a
eight tenney-year term for leases. that has been in place since 1920. we believe it is time to revisit that and shorten a lease terms to further incentivize prompt development of oil and gas resources. those lands are something been leased and not develop. secondly, need the tools to push forward with respect to reform efforts. those tools include organic legislation by the united states congress greeted by this agency. this agency has a herculean mission on behalf of the united states of america. it essentially codifies the
important mission of this particular agency a something we're very much supportive of. in addition, we're looking at the creation of an ocean energy advisory committee led by the former director and we have a good effort under way in to create a committee. so, we request that congress help with the appropriation of the institute, and finally, i know there has been debate about the time lines for the expiration times and the requirements now that we have to approve exploration plans within 30 days. frankly, that time is too short. so, i request also that we extend that time.
third, we ask congress to work with us and continue to look at ways of making sure we return to the american taxpayer the oil and gas resources owned by the american public. the royalty relief programs for offshore drilling are not necessary in the context of the oil and gas prices and the oil and gas companies making the record profits they have been making. it is not an incentive that is actually needed. there are other things that we have that are important for us as we deal with those particular subsidies. and lastly, with respect to the return to the american taxpayer and the protection of the american taxpayers, we hope to work with all of you to address liability limitations concerning oil spills.
mr. chairman, ranking member, members of the committee -- the me just say to all of you, we have a lot of work ahead of us. there is no doubt the deepwater horizon awakened this country and the congress to do revision on the way that we deal with oil and gas. i am proud of the work we have done. i know critics want us to do different things. but for us to be at a point where we have issued 14 deepwater permits in the gulf of mexico, that we have more than 50 now in the shallow waters or the industry is working and where we essentially have dealt with a national crisis amid -- continuing to produce oil and gas is something i am very proud of. we could not have done that if we did not have the support of this committee and the leadership. thank you, mr. chairman. >> thank you very much.
but me start with five minutes of questions. then we will just go around the day as -- the dias. let me ask for maurer details from you or -- more details from bromwich aboutor the drilling on the outer shell. another has been a lot of criticism, how slow the department has been to issue permits another is a great desire to get additional permits issued more quickly. if you could elaborate what the circumstance is and what the prospects are for additional permits in the coming weeks and months, that would be useful. >> thank you, mr. chairman. let me make a few comments and
then turn it over to the director. there were a few times where we have the subsidy caps are no place and they had been tested for us to have a level of assurance that we could move forward in the deep water in a safe way that had been done before april 20. we actually went to houston to end prospects -- to inspect and review the containment mechanisms built above the top corporations. what we have done is, based on those assurances, no move forward with the issuance of permits. i will have director bromwich give you a report on that. >> thank you, mr. secretary. we have approved permits for 14 unique wells in deep water.
there may be different permits for each well. i think everyone is interested in new drilling that is done in unique wells. the number on that is 14. as the secretary points out, we could not really grant deep water drilling permits until there was contained a capability. that did not happen until the latter part of february. so, if you do the math, we have actually given, no permit a unique deepwater wells on the average of once every four to five business days since we had capability available. that is not a significantly slower pace than has historically been the case. the notion that it has taken a very long time to permit deep water applications is really not true. there are currently 14 deepwater
permit applications that are pending. there are 25 that have been returned for various reasons, usually quite incomplete applications. they may not have certified the have met all the safety requirements that are not required. they may not have submitted information related to contain that. those are run on the main reasons why permit applications may be returned. in terms of shallow water, 53 have been approved since last june when requirements were put into effect. there are only five shallow water permits pending. there are six that been returned. since october, when our new safety rules went into effect, the pace of shallow water permitting has been roughly six per month. the historical level has been roughly eight per month. that is not a huge difference, and if you think about the additional safety requirements that are required of the operators any additional reviews
that are required of our people, it is not a major discrepancy. >> let me just be clear. you stay there are five applications in shallow waters that are currently pending? >> correct. >> and there are 14 applications and the deep water that are pending? >> correct. >> and there are others returned ies asking for' additional assurances or information? >> that is right. >> ok. let me ask about api's role in this. as i understand it, they developed a consensus safety rules. they are a standard setting body. to what extent is your department and your agency
relying on the us? on those consensus standards? is inappropriate we do it that way? maybe you can elaborate on that. >> chairman bingaman, let me say we have a constructive relationship with the industry and with api, but that does not mean we should be dictated at the department of the interior with respect to what the standards are. obviously, there is tremendous expertise, but at the end of the day, it is our judgment. i will ask the director to elaborate on that as well. >> historically, we have relied on consensus recommendations that have been developed by
api. in a different world where we had our own resources, we would not do that. we have a in fact look at the consensus recommendations and selectively inc. those by reference. i think that this may be the only way to proceed at this time. >> senator bayh rakowski -- murkowski? >> thank you pour being here. in thank you for the efforts you have made. -- s. thank you for the efforts to have made. the president made announcements on the annual lease sales and the permitting. i do think these are positive signals. obviously, we want to make sure they translate into action and reality. we will be working with you on that. mr. hayes, i want to single you
out and think you for your efforts. i think you recognize this is critically important and it speaks to some of what my colleagues were discussing earlier in response to senator manchin's question. i think we recognize we have a lot to do. i want to continue working with you on this. secretary, i want to ask -- just for clarification -- because you and discussed the various incentives you wish to put in place to advance increased oil and gas production. when i think of incentives, i think of positives, things that would encourage you. in your comments, you suggest amending the mineral leasing act to allow for basically of a shorter period of time than 10 years in order to prompt the
producers to move more quickly. as we have discussed in alaska, we have specific issues there that do not allow for prompt -- prompting is not going to get us going any further any faster. we have a 30-day expiration. . 60-days is it it. if what it does is restrict the ability of the producers in terms of gaining or what their lease might be, that concerns may. i understand your proposal is -- you want the discretion to shorten that. i guess the question would be -- would you also seek to give the secretary discretion to lengthen that? we are talking in alaska where you have not only in the environment, but you have the
opportunities to get in there and explore and produce, but you also have regulatory issues. can you speak, just very quickly, to whether the incentives could go to lengthen the proposed lease, as well as what you are seeking to do, which is to shorten it? >> thank you. first of all, with respect to the ocs, we have those authorities and yet been implementing those. our proposal on the mineral leasing act will address the onshore areas of oil and gas leak. i think those are very important for all of us. we have 41 million acres of land that have been released for oil and gas production. and yet only 12 acres are --
only 12 million acres are producing. and we continue to hold resales for 2011. we of more planned for 2012. in our view, if we were able to shorten the lease terms, some of this area that is held out there would be rejiggered be a greater incentive for the companies to know they have x -- that is held out there -- there would be a greater incentives for the companies to know they have a limited time for development. you know, i think alaska -- as you and i have often spoken, senator murkowski, it is a world unto itself. we need to recognize the realities in the arctic, offshore or onshore, a reality is that require us to impose, if
you will, some of the same requirements that we might say if we were talking about onshore in the state of new mexico. >> very briefly, and i think my colleagues will pick up on this as well -- there is been discussion about the length of time and why it takes as long as it does for a permit. your proposal is to allow for additional time for these drilling permits, increasing from 30 days to 90 days, with the ability of the secretary to expand to an additional 180 days. in view of the concern expressed in this committee about the length of time it takes to issue these permits, by allowing for more additional time, does this not add to the uncertainty and a continuation
in the delay of advancing the permits? i am over my time. with respect to my colleagues, i would ask you to address that, try to be brief about it, but i know my other colleagues of the same concern. >> mr. chairman, senator murkowski, the reality is that 30 days is simply not enough under the statute in terms of the expiration plan that comes within that 30-day time. one of the lessons that should be learned from the deepwater horizon, the national crisis, is the agency did not have the capacity, the resources, or really the time to do the effective job it should be doing. so, we're talking about having night and a time frames -- night and day conference. it seems to me we should make sure the best of the signs and the safety measures are being
looked at. i do not think it will have an impact in terms of having in ordinance delays for oil and gas production in the nation's oceans. >> thank you. >> thank you, mr. chairman. it is good to have my old seatmate from this committee here. i am going to ask you a few questions about offshore practices. i want to start with the matter that involves energy production off shore. as you know, mr. secretary, there is an enormous interest today in more natural gas production. certainly the events in japan, all whole host of issues have generated tremendous energy. clearly, how you go about striking a balance? a balance between natural gas
production and environmental practice of fracking. my question to you is, you would have the capability to whisk through these kinds of issues and have us come up with some very sensible models, models that can allow us to strike a balance between producing more natural gas and dealing with these legitimate environmental concerns. i have come to the conclusion they are legitimate. and you all would have a chance to come up with the model, and perhaps get out in front of what would otherwise be years and years of litigation. you have served on this committee. that is what we deal with all the time. here there is something very exciting -- natural gas production. what are we doing at the department of the interior with
the leasing process? it gives us the chance to be out in front on this issue. futurepresident's energy very much envisions natural gas been a significant part of what we do. i have often said unless we deal with the fracking issue in the right way, it could be an achilles' heel for the united states. so, now we have a fracking forum. i would now ask secretary david hayes to respond. >> yes, your thoughts on the leasing itself? the process? >> i will be very brief, senator. we had three public forums in arkansas, colorado, and wyoming on the fracking issue and how we
should address it. we do do hydraulic fracking on public lands. we've asked for recommendations on hydraulic fracking. will be in a dialogue with them. -- we will be in a dialogue with them. we are fully engaged. >> i hope he will do more than work just with the president's task force. i think that is constructive. i think you have an opportunity, because we know that public lands, that there is activity going on, it is the perfect place to see if we can get real models. whatever the task force is doing, i am for it. it is constructive. i would like to go further, going to the real world where we will see production and have a chance to address environmental issues. one issue i want to talk to you about involves the drilling
contractors. as the investigations made clear, there were problems with respect to bp contractors. respecting transition and halliburton. halliburton never reported the deepwater horizon while was faulty, even as it was being pumped into the well. transocean went to federal court to claim in dignity under the u.s. federal laws. they gave themselves bonuses. what are your recommendations. we will be dealing with the starting tomorrow and over the week. what are your recommendations, mr. secretary, for holding the drilling contractors -- not just leaseholders -- responsible so we do not get into another one of these fingerpointing
routines. what would be your recommendation? >> director bromwich and i have had a series of conversations and meetings. i will have director bromwich deal with the contractor accountability issue. >> it has not worked as well as it should have. which is why i announced recently we were going to extend our authority to include contractors. we have the legal authority to do it. certainly in egregious cases, we want to exercise that regulatory authority. it has been a dormant power we have had. there is a virtue of clarity going against the operator. in certain cases, we haven't in the should use it.
>> the alternative -- and i am not prepared to go there yet, but we do not have a way to hold the contractors accountable. clearly, people are going to start talking about bonding requirements and the like. so, the ball is in your court to do this in a hurry. >> thank you. >> secretary, good to see you again. thank you for being here today. my first question relates, how do you explain the difference that the companies in drilling have as far as the regulatory process and the perception that any agency have relative to expediting these permits and getting them done? may be addressed the shallow water compared to deep water that senator hutchinson broad up -- brought up.
if you can address the permit application in 30 days and do that, is there any defacto timeline on this process for getting approval? >> thank you very much. first, on the perception -- washington and these issues are in an interesting place. we have tried to move forward with upholding the policies come up which we are supportive of in the gulf of mexico and other places in america's oceans. we have also said we will not retrench this position, that we will do it in a way that is safe and protect the environment. as far as the statistics indicate to you, we're not just
about talking, but we are walking the talk we are saying in terms of drilling and production in our country. i will tell you and multiple meetings with oil and gas executives, they understand what we're doing. they understand they do not have the containment capability available like last year, and they understand there is a lot of work, because of the issue in terms of being in the safe position we want to be. so, that would account for the noise that goes around this issue. with respect to the shallow water, the time lines -- i do not think that is a significant amount of time extension,
because we do need to have that time to adequately review these expiration's. >> is there another piece to that equation needed the approval process is 30 or 90 days, but you can continue to reject the applications. is there another piece need, and if so, what would work in your opinion? what is your recommendation? >> senator hoven, we will be happy to work with you on in the language. one of the things we do not want to do is enter into a process that does not get anywhere. setting time lines are important. many times, we have returned
permits because they are incomplete. i think having a time line is correct. having clarity from us, which is part of what director -- director bromwich has been doing is important, but i understand your point. it is important to not have industry coming in with applications that need extensions. >> i think there is analysis where we should say, ok, how do we do this in a way where you have perhaps a certain period -- you can reject an incomplete application, but we need some way to make sure there is a reasonable time line for these permits, because i think a lot of them are getting rejected, but this permitting process goes on for a lengthy time. i think that is what we're trying to get at, so there is a
fair process that protect the environment, but it empowers private investment and energy production for this country. >> i agree with you. i do think that the 30-day timeframe does not work to advance that particular objective because there's not enough time to work. i think if you add the 90-day timeframe, it would allow us to streamline the process and you have better product coming for the industry. one of the things that has happened over the last year, members of the committee, is that templates are being developed. yes, there are 14 deepwater wells being drilled and over 50 shallow water wells being drilled, but we have changed the world. we've changed the regulatory regime. our agency is understanding the
template moving forward. we will always be looking at ways we can improve will we do. >> i understand my time is up, but i think that is where senator begich's legislation is trying to go. i understand there are other issues to bring up. thank you, mr. chairman. >> thank you. senator frank anden? -- senator franken? >> thank you, mr. chairman. thank you, mr. secretary. the house passed a bill for processing offshore drilling permit approvals. after that, the permit would be deemed automatically approved. so, it seems like this is a bad policy on a number of rounds. first and foremost, i think the number-one lesson from the gulf
oil spill, that you cannot assume there are adequate safety measures are in place. can you also -- if you cannot get it done in 60 days, i guess i instead of being automatically approved, you just say no. that is probably also a bad idea. can you talk about your agency's ability to ensure safety in offshore drilling operations? >> i think it would pull up the rug from what we're trying to do here, which is to have safe oil and gas drilling in america's oceans. we are in the position where it would not work. i think it would be good for director bromwich to talk about the process. >> i agree with the secretary and with you, senator.
it would be a bad idea to of arbitrary time limit within which you would have to approve permits or they would be deemed to be approved. an operator -- i am not saying there are many of these or any of these -- could submit an application that did not meet all of the safety requirements that we put in place, and i think we have significantly raised the bar on safety, and then they could run out the clock and have the application been approved. so, it would be a substandard applications that would not satisfy requirements, and we would all be at greater risk if we had that system. >> the purpose of the measure is supposedly to expedite the permitting process, but we have the numbers. u.s. issued 66 deepwater permits -- you have issued 66 deepwater permanence sense -- since
october 2010. what other options do we have to expedite permitting without sacrificing due diligence on safety? >> we are doing several things. we're looking at our permitting process to see if there are improvements in transparency. many times operators do not know where their permanence to any system. we're working to communicate with them where their permit application is in the system. we're also looking to develop templates and checklist so operators know exactly what is expected of them in advance, so we eliminate some of those questions up front and we're working on templates and checklists and forums to expedite the process. i think those are ways we can do that. one of our historical problems is a lack of resources which includes not only lack of an adequate work force, but also
lack of an adequate work force to process and review permits. we have finally come recently last month got additional money which we are allocating across the board. some of those are permitting personnel. >> thank you. one of the most concerning findings in the national oil spill commission report is that some oil well operators with "shop around" for someone in the interior department that would approve a permit. i know most people here agree the general management service was in dire need of reform, and we're glad to see reforms of the administration has taken. the new bureau of ocean energy management has taken an
environmentally responsible way to evaluate these applications. >> we have focused -- not only because of the report for the president's commission, but there are other reviews and studies as well that of identified ways we have failed to take environmental concerns into account. we have focused on a. we're working on specific structural steps to ensure there are balances between the developments of resources and environmental considerations. one of the things we're doing is create a position of chief environmental officer to make sure the voices of our environmental personnel are heard and factored into the balance of leasing decisions. >> thank you. my time is up. thank you, mr. chairman. >> thank you, mr. chairman. mr. secretary, good to have you
back before the committee. we appreciate or testimony. your last year on march 2 -- you were last here on march 2. at that time, you and i had a conversation about my concern that there were claims that rigs were leaving the gulf and have left the gulf in the context of the moratorium to go to other offshore drilling. at the time, you said you would provide information about it. we have since followed up with your office twice and i have yet to receive that data. so, i would like to reiterate my request that you provided the data on the brakes -- on the rigs. i think it is important to have that historical now. in your testimony today, you
state -- and you also talked about this in your oral testimony today -- where in the united states are these increases in oil production? where these -- on sure, offshore? >> thank you for your question, and i will direct my department to get that information to you on a number of rigs. just in the last two years -- we have had over 6 million barrels. we have produced just a third from the outer continental shelf. offshore, we have had 41 million
acres of leased. the increase has been 5% in that same time. >> so, shallow drilling is off by 50% since the moratorium, and i think there are not any deepwater permits currently producing? you indicated you have approved some of those permits now and have worked with her on that. but i guess what you are hearing today, from senator begich and others, we do need to work on this process and in the consequence of the moratorium, we look back and see what the impacts were to avoid some of these steps backward. i think the president made good comments over the weekend. i was encouraged by what he said about extending leases in the gulf.
he's also called for more lease sales in the national petroleum reserves in alaska. i hope we continue to see some of this expedited processes to get moving in alaska and also on the outer continental shelf. i would say to senator franken's question, there is frustration and there is this notion that the bureaucracy should be given an appropriate amount of time, but beyond that point, the companies that have submitted applications need to know one way or another. and the burden should be on the government at that point to say if they are moving forward and be begich and hutchinson bill move that forward. i hope you would work with us. let me switch, if i could, for a
second to a statement you indicated that there are three buckets of the administration was looking at. legislation was introduced by my colleague and myself. the deployment of energy efficiency technology in the industrial space and all sorts of the elements of the federal government. i wonder if you have any thoughts on that legislation today? >> senator portman, i have not reviewed the legislation, but i would be happy to do that. along with my colleague secretary chu, obviously energy
production is a huge part of that bucket to get us to the energy future. we're promoting less than 50% of our oil because of the fact that we're becoming much more -- much less energy efficient. so, those are addressed, and we would be happy to take that legislation and get back to you on it. >> as you say, we would love to get your input. we had these issues from the last hearing. >> thank you, mr. secretary. >> thank you, mr. secretary. let me begin by commending you
and the president for getting us back to where we were before the deepwater horizon spill, in terms of having a vision for opening up more domestic drilling. i appreciate that. it was the right step to take. now it is the details of how we actually accomplish what the president laid out. i can only say -- using words, actions speak louder than words. that is where we are right now. i am not just saying we want to expand drilling, but actually doing it. i want to clarify a couple of things that are important as we try to push the bill through to actually accomplish opening up drilling. i want to clear for the record -- and this is from the eia short-term energy outlook. this is not a democrat sure. this is not a republican star. this clearly says the production
of oil is as high as it has ever been, that you can clearly see it is going down. and if we do not start issuing permits more quickly for new drilling, if we do not start exploring in areas that really deserve to be explored, this is not kind to be reversed. even if we made those changes today, i am not sure we can reverse this chart. i want to be clear. we may be as high level as today, but we're not going up. we are going down. number two, director bromwich, you said you had 14 deep water wells. are any of those new? or are they all revised? >> i believe they were all previously permitted. >> that is correct. i want to save for the record, these 14 deepwater wells are not
new. they are revised. they have been drilling prior to the deepwater horizon, and i understand that not all 14 are actually drilling. some are water injection wells. do you know how many? >> that is not correct. >> ok, they are all drilling, but they are revised permits. there is not a new deep water permit? is that correct? >> yes, ma'am. >> let's get this clear. it is necessary for this to be clear. while your staff is getting that -- because it is my understanding based on a chart i got from your web site -- this is not my website. it has zero, zero, zero, zero four deepwater in 2011. it does not say one. it does not say 14. it says zero.
this is from your website. the facts are that despite our efforts, the moratorium has been lifted, there has not been deepwater drilling. >> there is one. >> there is one? ok. we have one new deepwater drilling well. my information is there are 100 exploration plans pending. is that your understanding? and that before you can get a a drilling permit, he need to have your exploration plans approved -- you need to have your exploration plans approved. how many? 100? >> far less than that. >> can you tell how much it is? >> my understanding is 36. >> ok, 36. the others may be shallow water, but i need you to submit that for the committee.
ok, we need to understand how many permits are pending. the bottom line is, we need to get permitting up for these numbers will get worse, not better. two -- >> let me respond, because frankly at the end of the day, it is within my authority of secretary of interior, but i would say with respect to your chart, the fact is that we are doing a lot to move forward with deepwater oil and gas production, as well as shallow water. and you lived through the nightmare just like i lived through the nightmare of the deepwater horizon. i would remind members of the committee, we have 38 million acres of oil and gas production in the outer continental shelf. we want to figure out a way -- we want to figure out a way of moving forward with production of oil and gas in these areas.
we talked about 14 p water wells. those are rigs were you actually have people working. i was actually on one of those visiting them as they started to move forward. so, 14 rigs now working under permits that have been approved trust but they were working before they got shut down, mr. secretary. i know my time is expired. it is important to recognize that unless we get new exploration plans approved -- you can understand the reaction by some of us when you are asking to expand the time for review. and the time for 30 days -- i understand it could actually be 50 days, mr. chairman. under the new approval process, it could be 170 days. i just want to conclude -- if you will bear with me -- with one chart.
i have 100 other questions and comments, but five minutes. mr. secretary, this is what the gulf of mexico looks like. i wish you could have seen what i saw yesterday when i got back from seeing floodwaters lapping these committees. this is what the gulf of mexico looks like. this is what our state does to support this industry. you can see texas, louisiana, mississippi, and we do not get one single solitary penny from all lease, a bonus, or a severance from any of these wells accept 3 miles off shore. no matter what laws we pass. this senate will not vote for anything unless there is some recognition of a platform that our state's search for this industry, or nobody would be getting any money coming any energy, any oil coming any gas.
i will into there. i have 100 other questions i will submit for the record. >> mr. chairman, can i make a brief comment? >> go right ahead. >> you know me well, senator landrieu, from my time in the senate working on this committee. i have a jurisdiction that takes me from sea to shining sea, all over alaska and it many other places. i probably been in louisiana and the gulf of mexico more than any other state, and the efforts -- that you rightly point out -- we need to focus on the restoration of the gulf coast. i know there are bills you are working on to get that done. there is the $1 billion early restoration on the gulf with bp that we're moving ahead with. >> [unintelligible] >> it will be at least 200. probably more. ok? i think you raise a very
legitimate question, and that is that we extract all of this oil and gas from the gulf of mexico, about a third of the nation's supply, and yet because of the last 100 years, you have read the greatest degraded at the systems -- at the systems, which we have been over many times -- ecosystems, which we have been over many times. i hope to work for word on restoring the gulf of mexico. >> we have a two senators who have not asked questions yet. senator manchin? >> you can tell the frustration -- i am sure you are hearing it lap and clear -- at the tiny. we will be voting on a bill.
i am hearing you say this should be 90 days, not 60 days? >> can i clarify, we are talking about two different things. i think people are confused. >> ok. >> there are apartments and there are plans. plans are a broader of 30 -- broader authority the operator six. there are a variety of permits under the plans. right now, there is a statutory 30-day limit on the time my agency has to review and exploration plan. there is currently no time limit with respect to doing it with individual permit applications. >> the permits are at 60 days? >> right. i do not know if you heard what senator franken asked, even if an operator submitted an application that failed to comply with our regulations, we are required to approve that
permit if that were passed. >> that is not the way i understand it. basically, you have the right to approve or disapprove, but you have to act on it. and the frustration as in the bureaucracy, it is just not getting back down. people are so frustrated because of the time element. it is so long, they have no certainty and they cannot plan. just a yea or a nay would help them get off the bubble. we are just asking, what time would it take to evaluate and get an up or down? >> with respect to a permit? >> correct. >> i do not now. >> so it could be six months, it could be four months? >> our people have no incentive to slow down the processing of permitting. most of the people who approved the permits are residents of louisiana.
it is their neighbors whose livelihoods are at stake. i think you have given us -- if you are giving us adequate personnel so we can do it, being transparent about where companies are in the process, i think those are major steps forward. i am worried about a legislative solution. i know the house version of the bill would >> we have a little bit of everything. what we are asking is the development in the amount of coal, some people have different opinions of that but it is the most reliable of our base load fuel. we have the technologies for carbon capture and storage. what is your opinion on a
national co2 pipeline. we know it is probably one of the best uses we have right other than just storing it, to use it for oil enhancement to make us less dependent on foreign oil. >> we have always been supporters of carbon capture and sequestration in particular, using the template that have already been used and developed for many decades. in my state of colorado, we drill wells to extract a co2 that is then piped into the oilfields for recovery. those efforts are a way we can move forward to the kind of clean energy technology that we want to have. we support having clean coal technologies and i think those kinds of concepts are ones we all need to export.
>> they are telling me we do not have the infrastructure to deliver the co2 to the drilling areas that would enhance the oil production. i don't think any private concern is going to be able to do that. are you looking at that seriously, or have you looked at it? >> i have not personally looked at it but i think it is a concept that is very worthwhile to export. >> we have the ability to retrofit existing coal-fired plants. we can do that, there has to be a market for it, but there has to be delivered. >> we will look at the concept. it is very worthwhile to explore it. >> basically we are concerned about our dependency on foreign oil. the high prices killing all of us. i have had phone calls and
letters and it was $4.19 an average this past weekend. something has to be done. we have to be more certain of what we can do in this country and less dependent on it for an oil that they are holding us hostage with. we are just asking for your help as much as is humanly possible. >> i recognize the issue of the day in terms of the concern the american public has with paying at the pump. we can look back at history from the price spikes that started in the late 1940's and 1970's, 1980's, and 1990's. there is no quick fix to the high price of gas for us now because of the fact that it is set on the global market and the fact that you have countries like china that are using much more oil and gas than they ever have in the past.
it is important for us to have a long view in mind as we move forward with the energy policy of this country. this committee have tremendous expertise with the senators and staff to help us make sure we can find those places in which the energy future can be secured. >> as you said, and has been going on for quite some time. in my lifetime it came to a head in the 1970's with the oil embargo. we learned nothing. we have grown more dependent, and we do not seem to learn from our mistakes. until we have an energy policy that uses the energy that we can produce, that has more certainty and dependability, we will continue to go down this road for the next 30 or 40 years. we are hoping to break that cycle. >> thank you for calling the hearing today on what is obviously a very hot topic that
people feel strongly about. thank you, secretary salazar, for being here, and for your patience in responding to all the questions and concerns that we are raising. i actually have a little bit different question than the ones i have heard. as we are looking at legislation to address concerns about permitting and drilling, one concern i have is that we not repeat the mistakes of the past. i know that i was quite surprised and i think many of us were last year during the bp oil spill to find out that the technologies for cleaning up the spill had not changed much over the decades preceding after the exxon valdez spill, there was
supposedly a process, and people put in place to try to address oil spill are indeed, that really had not been effective and the funding had not been there. my concern is that as we go forward and look at how we improve the processes for permitting and look at drilling in the future, that we are able to develop the technology to make sure that if there are deep water spills that we have technology to clean those up. and know that the president in his 2012 budget included an increase in funds for oil spill research and development, but it is not at all clear to me that we have yet in place a process for how we raise those funds on
a regular basis and how they are going to be spent, and who is going to supervise that. i wonder if you could speak to that and to whether if you are comfortable that we have in place a process to address oil spill research and development or if we have more work to do. >> thank you very much for that question. the fact of the matter is that i think when one looks back at the exxon valdez report that came out of the presidential commission on the deepwater horizon, that national crisis and environmental catastrophe which cause so much damage was not one which really created much change in this country. things continue much the same way without those lessons being learned. the president and his administration are absolutely committed to making sure those same mistakes are not repeated in the wake of the deepwater horizon oil spill. that is why there has been the robustness of the effort to move forward with the best danders an
organization to oversee drilling in america's oceans and to help develop those same kinds of protocol around the world. in terms of the funding questions and what we are doing with respect to oil spill response, we do need funding to be able to have an agency conduct responsibly the important missions that have been assigned the bureau of ocean management and regulation. the continued regulation to give additional resources to direct the agency to move forward in that direction, they are not sufficient. there are more resources needed for the director to be able to hire the kind of personnel that will have the expertise in petroleum and have the ability to do the kind of inspections and oversight that are necessary. he can speak more about this, but in the last several weeks he has been a great deal of time looking at the control centers, the remote data centers that the
industry has in all the big companies that are able to monitor what is happening. we need to have our agency move forward in having some of those same capabilities. it will not happen unless the resources are there. it comes back to the question many of the members of the committee are asking. how can you make sure we move forward with permitting in an expeditious way? a large part of the answer is you need to have the personnel on board to be able to do the work. >> i share your concerns about their being insufficient advances in oil spill research and development. we have not progressed very much in the last 20 years and the truth is, i don't see much going on right now that would improve things. i completely agree with the secretary that we need more governmental involvement in research and development, but we need more private sector
involvement in developing new technology. one of the consensus conclusions that people come to as a result of deepwater horizon is that there was insufficient research and development of the private sector in every area indicated by deepwater horizon in safety, containment, and with respect to oil spill an oil spill technology. that was true then and unfortunately it remains the case today. >> thank you, mr. chairman. >> thank you very much for your generous time. we do have some additional questions that will be submitted for the record, but we appreciate your being here. did you have something final you would like to say? >> we have been working on this energy safety by street committee which is doing some great work to answer many of the
questions that were asked your. we also have to proposal in front of the u.s. senate for the creation of an ocean safety institute. i would like to give a quick summary of what we are seeking because it is partly in response to senator shaheen question. >> i will be quick, mr. chairman. the ocean energy safety advisory committee chairman, populated by folks from academia and other governmental agencies and industry has a task ahead of it of trying to do a survey of what research and development is going on in areas of well control, containment, and spill response, but there is no central place, center of excellence that they can turn to administratively to help the secretary and the director then implement our deepest needed and
how the regulatory agency kept up to speed in terms of what is going on with advances in all of these areas. that is the genesis of the proposal that we have to respond to what secretary to has also requested to be a good regulator. having a collaborative institutes would meet that goal and helped organize the effort. >> again, thank you very much for your time and your testimony. we appreciate it very much and wish you well. >> you can watch all of the hearing we just showed on line at the c-span video library, including testimony by senator kay bailey hutchison of texas and mary landrieu of louisiana. as well as former deepwater horizon incident commander, admiral thad allen, who called for more testing on the use of
dispersants in oil spills. tonight on c-span "road to the white house," herman cain kicks off his campaign in atlanta georgia. he has made several trips to early primary and caucus states, new hampshire and iowa. you can watch the former chairman of the federal reserve bank of kansas city at 8:00 p.m. eastern here on c-span. it will also be on c-span radio, c-span.org, and the c-span video library. representatives from apple, facebook, and google testified on thursday about consumer protection in mobile devices. it has been reported that apple's i phones collect data on the location of their users even when they are turned off, storing the data for up to a year. apple says it has since fixed this with a software package.
you'll also hear from the director of the federal trade commission's consumer protection bureau. arkansas democratic senator mark pryor chairs this 2.5 hour hearing. >> i want to welcome the new ranking member. we are excited about you and your leadership here. we need to talk offline about this great subcommittee, but thank you for being here. this is a very important hearing on privacy in a mobile work in place.
i appreciate all of your willingness to participate in this very important dialogue. as technology evolves, consumers continue to lose control of their personal information. without question, cell phones have become a part of that trend, and as they become more and more versatile. today more than 234 million americans use mobile devices and 73 million americans have smart phones or are expected to own smart phones by the end of 2011. there are hundreds of thousands of software applications on the market today. they allow us to play games, share information with friends, read the news, find the cheapest gas in town. i am aware of one application that allows people to find the nearest kosher restaurant and nearest synagogue, so there seems to be an apt for everything.
consequently, it is not surprising that we are facing a new and emerging mobile world that lacks basic parameters in best practices. where are the privacy policies? that is some of the things we'll talk about today. the mapping of consumers movements without consent is unacceptable, and an application game that transfers of consumers information without informing the user is greatly troubling. while location technology can assist law enforcement and there certainly are good things about it, it can be helpful in emergency situations, ngo location tracking pose a serious safety concerns. their best to work with domestic abuse victims have noticed an increase in the number of clients balked. there are tragic instances where stockers exploited the gps system and the location data
collected by consumer smart phones to track their victims. the results have been deadly in some cases, demonstrating a highly intrusive nature of some of this technology. one website sells something they call mobile's by software and actually markets this product as a completely self monitoring program. the wells it -- website says it remains hidden but routes calls and text to its server. they can log in and see a complete record of incoming and outgoing calls, the time and duration of the calls, and read text messages both send and receive. i would like to hear from our witnesses today about the risk to consumers when their information is collected and reported, the consumers understanding of what information is being collected for transfer, the extent of deal
location information collection and related privacy concerns, with an emphasis on children, how companies are working to allay these concerns, and suggestions for enforcement of basic privacy rights and security policies and standards in the new application economy and online mobile world. >> this is a new and exciting opportunity for me. i am looking forward to serving with you and i think for scheduling this important hearing on this important topic. i became ranking member just in the last couple of days, and prior to that had a previously
scheduled conference, so i will not be able to stay, but i did want to make an opening statement. like most americans, i am protective of my personal information and i believe i should have control over who accesses that information, how it is accessed and ultimately how issues, including by commercial entities. as the father of young children, i am very concerned about protecting their identity and safety when they use mobile devices and other online applications. more children are accessing online services. insuring that parents are well informed on how to best protect children is a goal i am sure we all share. recent revelations that apple i phones have been tracking and storing user locations without consent is cause for concern. these and other incidents have led many in congress to question whether the federal government
may have a legitimate interest in increasing its role in regulating this space. i do want to commend apple and facebook for taking swift action in both cases to correct the problem. i prefer to see the industry self regulate, and i am eager to learn from our witnesses on the measures that have been put in place to safeguard against possible future consumer harms. i think everyone here knows very well the mobile market place is growing and changing rapidly. we now have access to mobile devices, speeds, and applications that were completely unimaginable just a few short years ago. it has turned into a multibillion-dollar business and consumer demand is clearly very strong. in our important efforts to protect consumer privacy, i hope we will not lose sight of the many consumer benefits that have come from the innovative technologies that are brought to market by the companies we will be hearing from today. as the chairman indicated,
location they services provide convenience is that consumers would not have a particular application did not have access to some level personal information. it is important to find the right balance that protect consumers' personal information while at the same time allows continuing constructed innovation to occur. at this point i am not quite sure exactly where that line is to be drawn and i would caution against passing legislation that would have unintended consequences. i am hopeful that the hearing today will shed some light on this important question. again, mr. chairman, i think for scheduling a hearing. >> we want to thank our newest member to the subcommittee, senator heller picks i was going to call on senator kerry. >> thank you. welcome to our new members on the committee.
mr. chairman, thanks for holding this hearing today, obviously one that attracts a lot of interest. there is a lot of money on the line, a lot of business practices, but also a lot of values, personal interest of americans. while today's hearing is obviously principally about mobile phones and the applications that come with them, which are quite extraordinary and which we all use and benefit from in a lot of ways, it is also important to put the mobile phone and applications into context because of the larger discussion about privacy itself. there is no one on the committee or in the country or the world who does not marvel at the power and the extraordinary potential that we are currently living and that we will live in the future with respect to the internet. it is constantly innovating and
moving, and many of us have worked hard and long with respect to the national broadband plan as well as the issue of releasing more spectrum for broadband, because we want to see this potential of the internet unleashed all across the country as broadly as possible. unfortunately in the united states of america, we have parenthetically been going in the wrong direction. we used to be no. 4 in the world in terms of our broadband reach and we are now about #16 or 20, depending on who you listen to. that is an appalling comment and one we need to take note of as we think about this. i also support investments in research and development and a bunch of other things that will contribute to the start up of different businesses and firms that will unleash our economic potential. we all on this committee
understand the automatic instinct inside a lot of companies that are interested in this which says washington, just leave us alone. we will do fine. we will make this work and the internet will grow. over the years, i think most of us on this committee have been guided by the belief that in a technology market that is moving so rapidly, that is the right approach in most cases. i have certainly stood by net neutrality. i have could by no taxation. i have advocated for as open and architecture as possible in order to unleash a full measure of creative energy an entrepreneurial activity that has really brought this wonder to all of us and continues to innovate. i am convinced that we made the right decision in the 1990's to protect -- to do things that did
not allow privacy or other issues to somehow eclipse that move for innovation. i think it might have slowed the technological of dances, but we are in a different place today. we just are in a different place today. we need companies like google and apple and facebook to join companies like intel, ebay, microsoft, hd, which have already come down on the side of common sense. very restrained, simple privacy protections. we need industry leaders to engage constructively in these legislative efforts to modernize our privacy laws, to come up to the state of art that we are in respect to the marketplace. we want the legislation to worked for both the consumer and
the entrepreneur. i have reached out to the companies that are here today over the last six or seven months and i appreciate the time that have taken to work with us so far. mr. chairman, i reject the notion, and one of our colleagues just raised that here is what we want to do but what we do not want to do -- i reject the notion that privacy protection is the enemy of innovation. it absolutely does not have to be and is not. in fact, and more trusted information economy, i believe, will encourage greater consumer participation and greater confidence in that marketplace, and in turn, more and better services in essay for commercial environment that is more respectful of other people. in the end, not in a heavy- handed, overly prescriptive approach, i believe that companies collecting people's
information, whether you are 8 tech tighten or not, ought to comply with just a basic code of conduct. we need to establish what we as a society in a country that has always about your privacy, what we as a society believe is the basics proper treatment of people's information. i know you can shut off your location services, but that does not do the trick. a lot of those services are services we want, and we want to use them, but we also want to know that what is happening to the information as a consequence of using them is properly protected and we are properly protected as individuals. i do not think you can continue to create or leave it to firms to decide on an ad hoc basis what that level of protection
ought to be. i think that is particularly true in an age when the supercomputers that are in our pockets are with us at almost all times and they are almost always on. particularly with young people, there will be a disposition to use most of those applications almost all the time, but it is also true with our computers at home and offline when we buy groceries or travel or purchase or whatever. as we sit here today, mr. chairman, there is no privacy law. for general commerce, whatsoever. data collectors alone are setting the rules. in the commercial privacy bill of rights that we have proposed, we propose rules based on fair information practices principles for all collectors of information, including mobile phone and mobile application companies that we will be
talking about here today. do not track is a very important issue and one that we ought to be deeply engaged in. whichever way we go on that, we still need to privacy standard. we still need the basic rules of the road by which everybody agrees we will protect commerce and the creative entrepreneurial ability of the internet and also protect individuals or at least give them the knowledge by which they make a decision as to how their information is going to be treated. i think that those principles include the idea that regardless of the technology or method used to track americans, they should know when they are being tracked, why, and how long that information is going to be used and in what way. they ought to know with whom that information is going to be shared and be able to reject or accept those practices, and they
need legal protections in that respect is not granted to them or the terms of that arrangement are violated. i hope we will have a chance at the right moments to tackle this issue within this committee. i think it is a really vital one to americans and is growing in importance. i look forward to hearing from the witnesses for the time i cannot be here and i thank you, mr. chairman, for your afforded us the time to make these statements. >> thank you, mr. chairman. i associate myself with every word and comma that you said, senator kerry. i think it is just wrong for people to be wondering and not knowing what is happening to them, not knowing that they are in fact being tracked. would you said about smart
phones or supercomputers, little supercomputers that tell other people where you are and some make it available to other third parties that use it and sell it and make money from which is a violation of individual liberties, in my judgment. we have 234 million mobile devices in use today. 75% of teenagers on a cell phone and talk on them and carry them all the time. 72% of parents say that they have slept with their cell phones create it is a neutral statement. [laughter] it shows the intensity of this whole thing. it has to be under your pillow, you just cannot be without it.
i think the online privacy issue is not something of an unintended consequence. i think it is a basic american right and the basic american responsibility. the ftc has not been very aggressive on this. not just the big companies but the little ones. there are hundreds of thousands of them paulding out applications that are totally unregulated. the question is, what do we do about it? or do you want us to do something about that? they have to be regulated because they are producing the same things that get people tracked. i think using a mobile device has an expectation of privacy, and in that the american people are misled, but that is part of the compact you make when you go into that business.
i appreciate the major players in all this being here. this will not be your last visit, i hope. i can assure you it will not be your last visit. as the on-line world grows and balls, consumer privacy issues grow and evolve with it. the question is, is anybody watching it? is anybody paying attention? are we just saying is not my responsibility? if it becomes entirely the responsibility of the federal government, people will not like that. consumers have the right to understand that the information that is being collected about them. they have a right to privacy. they are not getting that, and i think that is what we are talking about today. smart bombs applications allow consumers to access information all over the world.
they can take and share pictures with friends and family on the go. they can record the world around them and share their lives with others. with this new innovation comes gigantic risk. as smart phones become more powerful, more personal information is being concentrated in one place. they are manager computers. civil actions now do have unintended consequences or intended, i am not sure. a lot of people are making a lot of money of the information they collect without the knowledge of those folks. a mother posting a smart phone picture of her child on line might not realize the time and date and location information is also embedded in the picture and available to anyone who can get it, which is pretty much anybody. a teenager accessing an
application may not realize that her address book is being assessed and shared with a third party. that is not meant to happen in this country without the permission of an adult's. for-year-old are not very good at that. they are not very good that. we have to do that for them. these third parties use this information to target individuals. it is very good business, but it is very cynical. it is an abuse of that power, passing on people's profiles. everything is new, but one thing is clear. consumers want to understand and have control of their personal information. they have that right. that expectation is not being met.
so i look forward to what our witnesses have to say. last week i introduced the do not track online bill of 2011. i think that is a terrific bill that makes it very simple pre it directs the federal trade commission to establish standards by which consumers can tell online companies that do not want their information collected. it is very simple and applies to everybody. then the ftc would have to make sure that companies respect that choice. mr. chairman, i thank you. >> with the committee's permission, i would like to go ahead and go to the first panel. our first panelist is director of consumer protection bureau at ftc. we welcome you. your statement will be made part of the record.
i would ask you to keep your opening remarks to five minutes a possible. >> chairman pryor, chairman rockefeller, members of the committee, i am the director of the federal trade commission's bureau of consumer protection. i appreciate dark tuesday to present the conditions testimony on consumer protection issues in the mobile market place. the views expressed in a written statement that we submitted represent the commission's views. today's hearing could not be more timely or more important. we are seen explosive growth in the mobile market place. device technology is constantly improving. robust wireless internet connections are nearly ubiquitous. businesses are innovating and consumers are purchasing and using smart phones at
extraordinary rates. there is no wonder why. today's smart phones are incredibly powerful, multitasking devices that mary's the surge capacity of a desktop computer with the personal, always with you nature of mobile phones. there's no question these devices benefit consumers, but there is also no question that these devices raise serious privacy concerns. these concerns stem from exactly the always on and always with you nature of these devices. the invisible collection and sharing of data with multiple parties. the ability to attract consumers, including children and teenagers, to their precise location, and the difficulty of providing meaningful disclosures and choices about data collection on a smart phone small screen. for four years, the ftc has work to protect consumer privacy, and we are working hard to protect
consumer privacy in the mobile market place. to keep pace with changes in the mobile market, the commission has tired dehired technologist, conducted -- has hired technologists and assembled a team of focused on mobile technology. every consumer protection investigation now examines the target of local technology. currently we have a number of nonpublic investigations under way related to the septic practices in the mobile market place. the primary law enforcement tool, the ftc act, prohibits unfair or deceptive practices and applies in all media, including mobil. the commission charged the public relations company with deceptively endorsing mobile gaming applications in the itunes store. the commission's recent cases
against two of the largest players in the mobile ecosystem, brutal and twitter, for demonstrate the application -- google and twitter, further demonstrate the application. the commission is reviewing whether its primacy in the privacy from work has kept up with technological change. the preliminary staff report proposed new privacy ramarks to address three recommendations to ease the burden on consumers to protect their own information. first, privacy by design, second privacy at the outset, simpler and streamline privacy choices, and third, transparency, so consumers know what data is being pulled down and who is getting it and who is using it. these principles are especially relevant in the mobile market place, given all the concerns related to the invisible collection and sharing of personal information, like the
precise the location data of children and teenagers, combined with the difficulty of providing meaningful disclosures in a small screen environment. the preliminary report also included a recommendation to implement the year russell choice mechanism of behavioral tracking, including behavioral advertising, often referred to as do not track. a majority of the commissioners have expressed support for such a mechanism. although the commission has not taken a position on whether to recommend legislation in this area, the commission strongly supports the goals of chairman rockefeller's could not track legislation and supports the approach laid out in that bill, including the scope of the do not track standard, the technical feasibility and cost in how the collection of anonymous data would contribute under the statute. i also want to commend senator
kerry and senator club which are for their work on the -- center clover sharp -- senator klobuchar. at a time when some kids learn how to play games of mark on before they learn to tie their shoes, we are reviewing, the privacy protection act rules to see whether technological changes in the on-line environment or changes in the rule of statute. while the review is still ongoing, remarks at last year's round table along with, as we have received demonstrate widespread consensus that both the statute and rule were written broadly enough to encompass most forms of mobile communications without the need for statutory change. in closing, the commission is committed to protecting consumers in a mobile theater for a law enforcement and by
working with industry and consumer groups to develop workable solutions that protect consumers while allowing for innovation. i will be happy to answer any questions. >> i will just ask a couple of questions and turn it over to my colleagues. thank you very much for being here. you mentioned that this is a small screen world. even when you have a large screen and you get all these privacy notices and agreements on line, etc., there is a lot of verbiage there you have to go through. it seems to me we have a particular challenge in the small screen world to have meaningful disclosure. have you given that much thought, and do you have a solution on that? >> we have addressed this issue in our privacy report. one of the reasons we did this privacy we think at the outset is because even on big screens,
geolocation tracking. you are given a prompt on cell phones, do you want to share your location data? et say no, you cannot use the application. you want the bugs analogy, but you also want to know who else may be getting -- you want the functionality. is it then being sent to analytics companies and advertisers and so forth? that information is certainly not available to consumers. >> my experience has been that people have no clue that the data is being transmitted or shared with anyone. they have no idea. do you have any statistics on what people know now? is there any way to know what
people understand about this data right now? >> there have been surveys that confirm your impression. most people do not know, and there is a reason for that. people are not told with whom the data is going to be shared. it is hard to point the finger at the consumer. the consumer just has no way of knowing that on most applications. >> the order i was going to call on, senator rockefeller, senator kerry. >> since 2000, it has been in
effect. it prohibits companies targeting children 12 years old or younger. it is widely disregarded. do you agree? >> i don't know whether i would agree with that. we do very aggressive enforcement. last week we announced a settlement against play-doh for a civil penalty of $3 million, the largest civil penalty by three times. they were disregarding it, and the order applies not just on the internet but for mobile. >> this would not be available without parental consent, is that correct? correct the violation was retain information. >> you have a lot of software applications available for popular mobile devices such as iphone or android phones. the qualify in my mind as an on-
line service. i am not sure they qualify in their mind as an on-line service. could you talk about that? >> we held a workshop in june of last year to discuss exactly these issues. there was widespread consensus that for example, mobile applications would be an on-line service and therefore would be covered. we have reinforced that and made it quite clear that mobile delivery of these applications is covered and it would be subject to the act. >> you have to provide conspicuous notice on what personal information is being collected and how it is being used. >> that is what the statute says. >> receive parental consent and provide parents with access to
all information being collected about their kids. any of these provisions, a violation of any of them, constitutes a very bad thing under the federal trade commission's act. the question is, such violations are subject to civil penalties. how much do you go after these folks? >> as i said, we have done quite a number of cases lately and have a number of investigations ongoing in the mobile space, including applications directed at children. >> i presume you believe that applications directed at kids under 13 are covered by the act? >> that is correct. >> according to news reports, applications designed to appeal to kids run of cartoon characters and games. they are collecting information at times without adequate disclosure.
would you agree? >> i believe that is correct. >> the act has been a very effective tool to protect children's privacy online. given that growth in the increasing use of mobile devices by children, even to the age of 4, what is the ftc doing to make sure that applications are compliance with the act? >> we are doing two things. as i mentioned before, we are looking for good enforcement targets in this space and we will be bringing other enforcement cases. >> what do you mean, looking for good enforcement? >> cases like play-doh that involve substantial violation of the act. literally hundreds of thousands of kids were playing these on- line games. part of what we do in our enforcement is try to send a clear message to industry. plato was a very big player in this field -- play-doh was a
very big player in this field. >> you testified before this committee last year on your plans to review the rules. one rule discussed was the applicability to mobile applications. the comments) last july. that was about a year later. i am curious about what you are doing to make up for this last 10.5 months. >> with all respect, the time has not been lost. these are very difficult public policy issues and we want to get this right. we hope to get something out in the next couple of months. >> i hear that so often in governments. people have to put out rules and
regulations. we hope to get that out in several months, but in the meantime, everything is ok. >> i am not saying everything is ok, mr. chairman. please understand that. >> all i am saying is, get the rules out. >> we hear you loud and clear. >> thank you. >> senator kerry. >> thank you very much, mr. chairman. to what degree is it true that right now, absent some, the promise to the contrary, any kind of company where a hotel website or mobile application operator can do whatever they want with the personal information have collected, and the individual would have no right whatsoever to tell them to stop or to control what they are doing with the information. >> if you are asking what the
>> you raised this question of for the ftc can go with respect to unfair trade practices, essentially saying that if somebody makes a promise to consumer but they do something other than the promise, you have a right to come in and do something. absent that, do you have any capacity to ensure compliance across the hundreds of thousands of different companies in the country with respect to proxy for consumers? >> we do if the practice is an unfair one under our statute. >> what is the definition of that? what is the standard that would be applied to that? >> they would have to cause injury to consumers that the coup merkt -- the consumer themselves would not cause.
>> have you made any judgment as to whether or not is it unfair for this information to be given to a third party, for instance? why would that not be something you'd want to think about? >> let me digress. we have made that argument in the data security area. there is a security breach and your personal information a share because of the breach, we apply the standard in those cases because you cannot reasonably avoided and the benefits add to the company and do not outweigh the cost to you. >> i just want to hone in on some of the things that are out there. suppose you have a government entity and government information would be a separate set of concerns, but in a private company at a private individual, in some kind of
action, what rights by people have? for instance, in a divorce proceeding, good ones bells or the other use information from a third-party, or would that have rights to that? what about a company against an employee. an employee has been fired for certain practices and the company wants to trace on their phone. >> you have sort of conical all the reasons why we think geolocation data is so special and so important. largely because of the examples you have given, we think geolocation data ought to be as special data, such as data about children, health, and finances that deserve special protection. >> do not track applies to third
parties, is that correct? >> the way we define it in our proposal, yes. when you move across website and you are tracked, that is what we consider to be third-party tracking. >> so our applications operating on i phones or android bones first parties or third parties? >> it depends on how the application functions. if you pick up "the new york times" application on your phone, if you then click on the facebook like button, then it raises difficult questions. >> the bottom line is, if they are treated as a first party, then it do not track would not apply any new standard whatsoever with respect to privacy protection for that particular application. >> that is correct, if you are
not moving across web sites. on some applications, you can do that. that is why the implementation of do not track for applications raises different questions. >> i just want to emphasize the need for why you need that basic standard and code a privacy. i will come back to another time. >> i have a statistic that is not nearly as sexy as chairman rockefellers' statistic that 72% of people sleep with their cell phones. this statistic shows that nearly three-quarters of consumers with that type of tracking and 77% do not want to share their location data with application owners and developers. that is why i believe we need some rules of the road.
particularly those for smart phones need to be short, clear, and concise. >> and that is not the truth right now? >> that is generally not the way they are delivered at the moment. >> ok. i know one of the most popular things in our hall sold -- household the congress did was the do not call registry a few years ago. now we are looking at do not track for mobile phones. what kind of feedback are you receiving? >> we have got up positive response, not just from consumers, who were overwhelmingly supportive. but as you know, the manufacturers and the advertisers are also gravitating to do not track. it is hard to argue in favor of
a business model that depends on deceiving consumers. i think a great deal is moving toward giving consumers easy to use, easy to find controls over their own data. >> what do you see as the challenges in implementing don't -- do not track. on browsers, the technology could do the same. one of the reasons we have this -- like a princeton computer science professor -- is to work through the implementation issue. >> hal -- how does the ftc proposal differed from what apple and google are proposing? >> on do not track? >> on do not track. >> they would differ significantly. the problem is there are browsers that are being adapted
to essentially try to clear cookies and send out signals to advertisers, basically saying don't track us. but assuming advertisers agreed to be bound by this, if that does not help, your bill has started the clock. i think the business community knows at some point, there will be i do not track requirement. i think they are trying to figure out how to do this. >> ok. does the ftc have the authority you need to promulgate regulations in this ever-more sophisticated world? do we need to do more here? i mentioned a lot of things we are looking at in bills, but in terms of giving you authority? >> we do not currently have
normal epa rulemaking, so we do not have the capacity today to promulgate regulations in this area. second, our commission has not sought that authority from congress. i cannot speak to the commission on that issue. >> all right. thank you very much. >> thank you. >> just two or three questions. with do not track, how would an app work? don't you have to track? >> when you say track -- >> for a lot of apps to work, don't you have to track? >> you go from one web site to another. that is tracking on the internet. >> right. >> of course, you can be physically track. >> i guess that is why i am
asking. >> thank you. >> senator, yes, for many apps that use steel location data for functional purposes, you need to enable your phone to use that. our concern is with respect to be at developer pulling down biggio location data to make sure the sap function works. there are other apps pulling a location data that has no relationship to functionality. there are others that are sharing it with ad networks, and this is something the consumers are unaware of. >> in an rulemaking, how hard would it be to reach that definition where you are not
allowing tracking for some things, but you understand it has to happen for others. -- it has to happen for others? >> we do not have rulemaking authority in this area, so to the extent it needs to be resolved across the board -- industry can do this or this body can. >> so the questions about employees and divorce cases and things like that, how is this data located and retained? is it retained in a way where you could go out and sort? >> there are a state lot cases involving divorce and other issues where guyot -- where geolocation data has been
subpoenaed and used in court proceedings. >> it has been done and can be done? >> i believe that is the case. >> won by data security breach? is that more likely in the current environment then if you have a lot of privacy sign- offs' and opt out and all that sort of thing? >> the commission has long called for legislation to enhance both the privacy protections, the safeguards companies are required to use, and to give public notice of preach. the concern we had was the more data of this kind, it is really special because the consequences can be serious. the more companies need to protect that data, they need to make sure they are not subject to preach, so these issues are related.
the more data company's collapse, the more requirements we should put on that data. >> i am wondering out individual specific those are in terms of any collection matrix that the company does. is it just a universe of people who have -- have gone to a certain location or something. >> the data is so robust, there are now predictive devices you can use to predict where you're going to be next. it is hypothetical. you know, what if someone called in sick. it is not inconceivable that your employer could get that data and decide maybe you should not be golfing every wednesday. >> maybe i need that. i have so far not been able to
see where the senate is going to be next. [laughter] maybe i need an algorithm to see where we will be tomorrow. thank you. >> thank you. one of the things missing in this discussion is the value a lot of this activity provides to the consumer. the value of being able to locate where this this is very important to my privacy because they have the technology that if this is stolen from me, or if it is left somewhere, i can remotely go and what it clean. -- wipe it clean. that is incredibly important to me, because frankly, i do not want people in here. have you all looked at the value that has come to the consumer, both from the robust technology that has been
developed and the incredible ability we have to do so many things? the fact that it is free, or almost free. you pay for some apps, and some have geolocation. most do not. it provides an amazing internet experience provided by marketing. what study has been done to show the benefits. i think most consumers -- asking me if i want privacy, that is asking me if i love my country. of course i want privacy. but we have had hiipa, i do not think it is anything to write home about. i am all for some things, but i am not sure the consumer understands the value they're getting. have you talked about that?
>> we have. this is part of the data collection we have done in our privacy review. i think -- there is no disagreement that consumers value tremendously the flexibility and capacity, the almost unimaginable capacity, that these folks a brain. no one is suggesting we turn the clock back. the question is we have a system that is more transparent that helps them understand the costs as well as benefits. one of those costs is -- you are absolutely correct. the contextual and behavioral advertising is a source of revenue. that is why many apps are free. >> is a whole -- is the whole
internet free? that is behavioral marking -- marketing. >> i think when we talk about tracking, we're not talking about an all or nothing choice. they have acknowledged for years that they should not be tracking consumers who do not want to be targeted by ads. this is a business model in which consumers have a choice. the question is, how many consumers would like to opt out completely? i think if the choice is rightly explained to consumers, the choices may be interesting, compared to ads that are delivered at random. i think most consumers would opt for targeted ads, provided that they know the information collected will not be used for purposes other than to deliver targeted ads. it is an important issue.
and to have control about those issues. i will not have to get those pesky rogaine ads anymore. [laughter] that is the kind of control consumers are looking for. >> i just want to make sure we have looked carefully at what the costs are and carefully at what impact is going to have on the most successful part of our economy in this country. i think for us to go down this road and not really be sure we're going to inform the consumer of the benefits that they take for granted right now to go away if we're not really careful and cautious about what we do -- let me ask this final question. let's assume for the purposes of discussion, you get all the authority you think you need, and we will fast forward two or three years. that is how long it will take. do you think the internet is fast? do you have an of staff to go over the bad guys? >> we have very vigorous
enforcement agenda, and in a couple of months we brought enormous cases against kugel, against twitter. -- against google, against twitter. our staff works very hard. there are very capable. >> do need more people? >> i need more people. [laughter] >> thank you. when i asked around -- i still have two minutes left on my questions, and what would like to do is finish my questions and move to the next panel, because we of several witnesses who are here and want to speak. let me just ask a couple of follow-ups with you before i let you go. one is -- just an open ended question that i do not need an answer to today, but it is something we to think about, and that is, when it comes to
children, should there be special privacy protections for children? i think that is a hard one, but it is something we need to think about. i would love to have your help on that as we think through it. secondly, if a person removes an app, does any of the software stay on their phone? >> i don't know that answer and i will have to get back to you. >> i will ask the second panel as well. i just did not know if you were aware. the third thing i have before a that you go is unconcerned about in-app purchases and i have written a letter to the commission on that. could you give us one minute on that and where you are and the industry is on not? >> we are engaged in a number of non-public investigations. the simplest way to put it -- no
one hands of a child of fun with a game expecting to run up a bill, and we have seen parents be presented with bills in the hundreds of dollars. we are quite concerned about that. we have registered our concerns. the app manufacturers and everyone involved in this. that is an issue we are pursuing. in certain my colleagues will have more questions for the answer. we would love for you to work with our staff to get those back u.s. if you can. what i would like to do now is excuse this panel, this witness and bring up the second panel. to save time, i would like to go ahead and do brief introductions as they are getting situated. we have five witnesses on this panel. we have brent taylor, the chief
technology officer of facebook, morgan reid, the executive director of the association of competitive technology, we have the vice president of worldwide government affairs at apple, and we also have alan davidson, and you can grab a seat. alan davidson, director of public policy for googol. and we have the president and chief operating officer of common sense media. so, as the staff is getting them set up -- we appreciate you all being here. we appreciate your testimony. your written statements will be made part of the record. so, if you want to streamline that and do it in under five minutes, i think the committee would appreciate that. why don't we go ahead and start with you, mr. taylor, if you could give us your statement
again? if everyone could keep it to 5 minutes, that would be great. >> thank you. members of the committee, thank you for inviting me to testify. mobile phones and internet bring tremendous social and economic benefits. just a decade ago, most online traffic was static. today the internet is an interactive social experience. thanks to the explosive growth of smart phones and mobile applications, people can access the web wherever and whenever they want. with that comes up legitimate questions about protecting per privacy on the web, and we welcome the opportunity to discuss this. everyone has a key role to keeping people save online. facebook works hard to protect privacy by giving users control over the privacy -- over the
information they share and the friends they make. we understand trust is a foundation of the social web. people will stop using facebook if they lose the trust and our services. at the same time, are really restrictive policies can interfere with the public's demand for new and innovative ways to interact. for facebook, getting the balance right is a matter of survival. that is why we developed privacy safeguards. i want to address five points which are covered in more detail in my written testimony. first, the openness of the internet is a catalyst for innovation. this is what enabled mark zuckerberg to launch facebook and it allows developers to add infinite resources for the facebook platform. it is an engine for jobs, innovation, and economic growth. companies are hiring individuals
to manage their social media outreach strategies. on the north are devising new models based on the social web. facebook is leading the way in developing new technologies to make the social experience more secure. second, mobile technology plays an increasingly important role in how people use facebook and the social web. facebook has worked to ensure -- over 250 people -- over to under 50 million people access facebook on their computers and internet devices. would provide the same safety on our mobile applications as on our website. if the individual changes are privacy settings, it will change their settings on facebook.com.
because each individual's privacy preferences are different, we cannot adopt a one-size-fits-all approach. instead, we asked users to choose how broadly or narrowly they wished to share information at the time they choose to share. we use privacy design practices. we are currently testing a new, more transparent policy. contextual controls allow users to decide how they want to share information. we continually engaged with the facebook community to evaluate and improve our services. we work to build trust on the
facebook platform, which enables independent developers to create social experiences on facebook. we believe that individuals should be empowered to decide whether they want to engage with some, many, or none of these third-party services. for this reason, we have created industry-beating tools for control so people can understand what they are sharing and make informed decisions. we also encourage community policing so individuals and employees can help us identify possible issues. for the independent developers who use the facebook platform, we require them to be responsible for the information they obtained. we are always doing more. last year, we work with other industry leaders to develop an open standard that improve
security on the internet. now that the standard has broadened participation, we are requiring developers on the facebook platform to migrate to it. this will foster a better relationship between developers and individuals to use the applications. finally, we used our position in the industry to encourage others to play their part in safeguarding the public trust, whether it is developers, users, browsers, or operating system designers. we support the government efforts to highlight important issues like today's hearing. everyone has a role to play in building and securing mobile and on-line environments. thank you for the opportunity to testify. i look forward to answering your questions. >> thank you. >> thank you, distinguished members of the committee, for the opportunity to speak to you
today. i represent over 3000 developers and small business entrepreneurs, many of whom right -- write apps. we talk in broad themes and big ideas. today, i would like to start differently. breaking it down to the smallest of the small. specifically, my five year-old. my daughter is learning to speak chinese. she is doing it because dad wanted to, but i let her use an old smart fun. i have loaded on chinese learning apps. she has games that test your recognition, it aims that tester year, and games that give her pictures. these are apps that will not make the cut on the desktop computer because my 5-year-old will never sit still.
when she gets older, she and i will use starwalk to show a real time movable map of the night sky. mobil apps like these open up the world for kids and adults in ways that were unimaginable five years ago. over 500,000 apps are available today. this economy will grow by $4 billion this year. if you include services, we expect to hit $50 billion. this is a remarkable success story in a time of economic uncertainty. u.s. developers account for the vast majority of apps available today, creating opportunities while exporting opportunities abroad. 80% of these programs were written by micro businesses with less than 10 employees.
this is not a silicon valley and phenomenon. in fact, we have apps from arkansas, west virginia, minn., and st. louis, missouri. this is a true, geographically- averse nature of this new app economy. while apple is helping small businesses grow, the applications provide the user with tools to protect personal information. for the phone my daughter uses, i have enabled most of the privacy settings. i never turned off the location services. i've restricted her ability to add or delete applications. as she gets older, the features i enable will grow with her maturity. we in the apps community are doing more to inform consumers
about how we handle their data. accordingly, we have all working group for developers to help them do a better job in creating privacy policies and helping them to understand the complexity of privacy regulation. most mobile apps collect no information, and therefore are not technically required to have a a policy. but we feel they should. because the most valuable asset they have is trust from their consumers. a check of a website can show you how quickly an app can lose favor to privacy concerns. apple is committed. for those few of -- those few fraudulent app makers, the ftc's act underscores the
considerable the enforcement measures available. the government has broad authority to go after bad actors and effectively oversee the marketplace. while recent events in the media have given a high-profile to bad actors in this area, and urged the committee to evaluate the considerable enforcement options available for creating additional mechanisms. too often, government interference in an emerging marketplace has unforeseen developments. the last thing we want to do is constrained this development. thank you very much. >> thank you. >> good morning, members of the subcommittee. i am vice-president for worldwide government affairs
for individuals 13 and over. we do not provide ads targeted to children. and we reject any developer app that targets minors for data collection. apple does not track user location. we have no plans to do so. there has been considerable attention given to the matter that our devices store and use a subset of our anonymous information base. the purpose of this data base is to allow devices to more quickly and reliably determined a user's location. these concerns are the rigid addressed in detail in my written testimony. i want to reassure you that apple is never tracking and individuals location from the information residing in the cache file on the user's
ihpne. fifth, apple gives consumers control over the collection of data on all devices. we have a master location services switch in our ios operating system that makes it extremely easy to opt out of location-based services. when this switch is turned off, the device will not collect or transmit location information. equally important, apple does not allow any application to receive device location information without first receiving the users explicit consent -- the user's explicit consent through a pop-up dialog box. this is mandatory in cannot be overridden. customers may change their mind and opt out of location services for individual applications at any time by using simple, on/off switches.
parents can use bus for controls to prevent access by other children to location services. in closing, let me state our unwavering commitment to giving our customers transparent control over their personal information. we believe our products do this in a simple and elegant white. while apple has not taken a public position on any specific privacy legislation, we do strongly agree that any company or organization that asks for a customer's personal information did -- should give its customers clear and transparent control over their information. we share concerns over the collection and misuse of customer data, and we're committed to continuing to work with you to address these important issues. i will be happy to answer any questions you may have. >> thank you. >> members of the subcommittee
-- my name is alan davidson. i am the director of public policy for google in north and south america. thank you for the opportunity to testify and for the committee's leadership in helping companies and consumers grapple with these emerging privacy issues. a message today is simple. mobile services create enormous social and economic benefits, but they will not be used and cannot succeed without consumer trust. that trust must be based on a sustained effort across our industry to protect you -- user privacy and security. first, a word about technology. many of us are already experiencing the benefits of location-based services, things like finding the low -- the nearest gas station on your car's gps. the u.s. postal service offers
an app to find the closest post office. you can find your friends on foursquare. these services can be lifesavers. mobile location services can help you get the nearest hospital or police station or that you know where you can fill a prescription at one in the morning for a sick child. that is just the start. thee now partnering with national center for missing and exploited children to explain how to deploy an amber alert to users nearby. we also help consumers find evacuation routes in the event of a hurricane. the rapid adoption of the services have been remarkable. eds -- and in the past year, 40%
of our usage has shifted to mobile devices. so, mobile devices have growing importance in our economy and the potential economic impact is staggering. they're creating new jobs and businesses. but here's the thing. to succeed, mobile service is required consumer trust based on strong privacy and security protections. at googles, we focus on privacy protection throughout the life of our products, starting with the initial design. we take the view that by focusing on user, that we use information where it provides value to consumers and we implement strong controls for information sharing, providing choice and security. we are extremely sensitive with
location information. we have made our mobile location services opt in only. so here's how it works on android. when i set up my android phone, one of the first screens i saw asked me in plain language -- to affirmatively choose whether to share location information with googles. a screen shot has been included in our testimony. if the user does not choose to opt in or go in their settings later to turn it on, the phone will not send location information. if the user does often, a location data sent back to google is anonymous. it is not traceable to a specific user or a device. users can later changed their minds and turn it off. beyond this, the android system notifies users before the user
installs an application. that way they have the opportunity to cancel the installation if they do not want information collected. we believe this approach is essential and a good way to handle the sensitive information. highly transparent information for users about what is being collected. up enjoys before information is collected. and high security standards to protect information. we hope this becomes a standard for the broader industry. the strong privacy and security practices i have described are a start. there is more to do. we salute the active role this committee has taken to educate consumers and we commend what you were doing to develop a comprehensive approach to privacy. the issues raised are challenging, but finding answers is critical to maintaining consumer trust, protecting information, and
supporting economic growth. we look forward to continued conversations with the committee. thank you. >> thank you. >> [unintelligible] thank you for the opportunity to discuss this krystle issue in the marketplace. -- this crucial issue in the marketplace. i want to talk about two things today. one, what is the common sense media position on what we must do about this. many say that common sense media embraces media and technology. one of of -- one of our founding believes is we love the media. but we are increasingly worried about children's privacy in a mobile world. 85% of parents say they are more concerned about privacy and they were five years ago. let me say that common sense
media understands the annette economy and the sheer brilliance of what these companies have created. it is so jarring to hear their can do attitude when comes to inventing technological solutions -- can't do attitude which comes to inventing technological solutions for protecting kids. why do we worry? first, kids live their lives online. they do not just access content. they created. our kids are growing up in public. many people in this room can attest to how hard it is to be a public figure. imagine if you were 13 and had an unflattering picture of you spread across the web, as happened to hundreds of kids across the country. 7.5 million kids under 13 are on facebook and millions more
teenagers. second, we are seeing too many examples of how our privacy is not protected in this world. we all have heard of the sony security breach that exposed the data of 100 million online data users. this focuses on mobile, and for good reason. the mobile world with all the privacy issues we have talked about on steroids. why? mobile phones are tied to a specific person. most computers are not. because there are more opportunities for tracking, with the mobile device, you have someone's location and it is always with you, and it is always with you during the night as well for many people. the average smart phone owner spends more time using applications than talking on it or on the web.
transparent. 3, no behavioral tracking of kids. there are limits to advertising to kids on tv and cable, not on the web. kids are children. let's not invade their privacy and pummel them with ads. parents and kids should be able to easily delete online information. too often when you're about young people who post information they later regret and find that they can never fully deleted from the online world. we have to protect these kids from permanent damage. finally, we must vastly increase education and information about online privacy. kids and parents need to do their part to protect privacy and the privacy of their friends. all large scale multi-year campaign would help them learn how to do so effectively. industry leaders will play an important role.
honestly, we wonder why the tech companies seem to require privacy applications for children and teenagers after the fact. this should be part of the design of the product or service. companies do this for some access. why can they do that for privacy for children? last week there was this quotation -- "we will figure things out as we go along," when asked about special privacy considerations for youth. come on. we have to do better than that. with: the tech community to bring their innovations skills to this issue. thank you. >> thank you. again, we will do five-minute rounds on questions. i would like to start with you, if i can, mr. reed. i want to ask about the wall
street journal article. i think you or someone referred to this a moment ago, about smart phone apps transmitting information. we have a chart that shows -- unless someone has taken that. and, mr. reed, how you proposed notifying consumers in a better, more meaningful way so they are not surprised to learn their information is being sent to folks or tracked? >> first of all, i think it is a great thing to look at in terms of informing the consumer. one of the best thing about the wall street journal articles is they do in education job that we in the industry have had a hard time doing ourselves. we benefit from that ride out the front end.
require geolocation? >> it is a great question. the way we have addressed that, if you use an application that wants to use location services, you get a notice before the application is installed that says "this application wants to use your location information. is that ok?" you have to accept that before installing an application. we do it very simply. it is usually not more than a screen. sometimes you have to scroll down a little bit. it is very simple and the key is timely notice and a choice for consumers. >> ok. >> you mentioned your five principles you like. when i hear mr. davidson talk and others, there are very legitimate reasons why parents may want to track from children.
apple tell how many people can actually read it? >> they have to say if they agree. we cannot -- we cannot tell for sure if they have read it. we try to make it short. >> can you tell how long they are on the screens? you have any way of knowing that? rex i don't know whether we can or -- >> i don't know whether we can or can. >> my guess is for a lot of folks, it is too much information and you agree with that understanding what is there. that is another matter we can discuss. senator rockefeller? >> thank you, mr. chairman. bret taylor, this would be to you. under facebook's terms and conditions, a userbe 13 or older.
despite this, according to a recent consumer study, a proportion of users were under 13. my question to you -- i understand it is facebook's policy not to allow children under 13 to have an account, but the description of the facebook app in the apple store rates the app as appropriate for aged four and older. who determines the rating for facebook's app? >> thank you. that is a good question and actually news to me. first of all, i would guess the
facebook application does not in and of itself does not contain a mature information and that is what the rating reflects. >> i appreciate that. but it does not appear to be true. you have 7.5 million under. this takes me back -- and i will not harp on that. facebook moves so fast. zuckerberg gets in harvard, he's 20, 21, gets a big new idea. it is my opinion that people who are 20 or 21 do not have social values at this point. i think he was focused on how
the business model would work. he wanted to make it bigger and faster and better. you cannot dismiss that 7.5 million users are under 13 and you have a policy that does not allow that to happen. i've been worried about suicides, people stalking youngsters who innocently put themselves on a blog and think it is just going to one person and it goes to indonesia and everywhere else. and you have 600 million people, and i asked the children whose lot -- who signed up -- i asked how many employees as facebook
sign up. she said 1600. world wide. i assume she is right. she is number two in the company. i assume she is right. then i said, how many people do you have monitoring the box to see what is being said? because i am, as are you, worried about what can happen to children, bullying, all the rest of it. i think it is a huge subject. i've had meetings all over west virginia on this subject. not necessarily on facebook, but in general. parents are terrified. they are terrified. school counselors do not know how to handle it. you get a whole group in and they are worried about this. and she said, well, we have 100 people who monitor these 600 million people, who i assume are doing a whole lot of blogging
every day, and my reaction to that is it is indefensible. and she said, out we will do better in the future. i want you to the intercompany here, because i do not think you can. >> senator, we emphatically agree with your points. whenever we find someone has misrepresented their age on facebook, we shut down their account. i am not sure the methodology of the study referred to, i can tell you emphatically, we do not allow people to misrepresent their age. there are a couple of interesting points here. >> when you say you do not allow people to misrepresent your age -- how can you do that? >> that is a very good question and something we have thought a lot about. what we have found is the most scalable way, both in terms of age enforcement, but also the other issues you have brought up around bullying and other protections for minors on the
side are big into a system allowing people to report problems on the site. i will talk about bullying first. under almost every single piece of content on the site, we have a link where individual users can report it inappropriate content and bullying. originally, that was a special queue that our support department would take and respond to almost immediately. we have expanded that to social reporting that allows people to reported not only to us, but also to parental and teacher figures also on facebook. if you are a minor on the site, in high school, and to seek an inappropriate picture as i think was brought up in one of the other testimonies, you can not only reported to facebook. you can report it to a parent or teacher who can deal with the underlying cause of why someone would post a picture like that,
and actually deal with it off line and the underlying issues. we have about 250 people working across safety and privacy and security at facebook. we have mixed those with the self reporting mechanisms because we find them very accurate. regarding age -- >> my time is up and i want to get a comment. i apologize to you. >> no problem. >> on the same question? >> correct. >> our view is not enough is being done. if we took a small amount of the time any of these companies spend innovating product and think about how to protect our kids, and frankly adults, but we're focused on kids, we think that would go a long way. these are the organizations that have created a platform which 600 million people across the world use all across the world
with the apps in terms of sharing location data without informing the user. how do those two things mash? -- mesh? >> we do randomly audit. one of the requirements we have is that you must get permission to share information with respect to location. there is a requirement that if you want to use location data, you have to pop up a dialog box that goes to the api we designed that says "we would like to use your location all- out or do not allow." . . .
be more relevant, others cross the line between sharing date why and -- data and cracking. do you see the line? >> thank you for the question, senator. if behavioral advertising is so useful for consumers, they should have the ability to opt in. so if i am posting on my wall about wanting to see elvis costello and say it is fine to track and monitor my conversations and advertise to me on that, then that was my choice, and i au obviously saw the value of providing my information to get something back. if i can, i thought senator kerry made a fundamental point in his statement when he said that he rejected the statement that there is a fundamental choice that needs to be made
between innovation and protecting privacy. we couldn't agree more. that is a false choice. most was not created by servicing private data. in fact, one of the beautiful things about search engine advertising is that customers are opting in every time they go on to a search engine. they putting up their hand and saying, i'm in the market for a truck. please advertise to me. $15 million a year is spent by advertisers in that part of the economy. that's fantastic. that's an example of where privacy is protected and innovation has happened. >> we are about out of time, but we can talk about it later. >> ok. >> thank you. >> mr. taylor and mr. davis, i'm
going to ask you in a minute if there is an example that you have of a problem that the company self-corrected. one of the things i have heard is that when there are problems that the company moves forward and self-corrects before anyone knows there is a problem. and a couple examples of that would be helpful if you have them. does apple track the location of my iphone? >> we do not, sir. >> is it logging in right now? is it logging in? is there some logging system that you look at from my iphone? >> no, sir. apple does not look at a log-in system for your iphone. >> how does it work that i might get some advertisement for something?
be solicited on an app or open my mail account or whatever. >> there is not advertisement on the mail account that is on your iphone. there is a web browser on your iphone that is just like if you used your computer, our safari web browser, and that works the same as it would if you were working from a computer. so if you were logged on to a web site -- >> i would have to be doing something for that to happen? >> correct. >> what is a crowd-sourced data base? >> essentially what it is, sir, is a map of locations, geo-locations of cell towers and wifi hotspots.
that is derived from information anonymously sent to us. so the phone when it goes by a location will say, there is a wifi hotspot here, there is a cell tower there. there is nothing that keths it to the individual or the individual's phone. they want to know where you are relative to fixed plates like a regular map. >> back to my other question, if you think of an example of something that could have been a problem that you-all went out and self-corrected? >> i think we are constantly innovating. i don't know if it is about fixing problems. we take comments to heart about
trying to do more to protect children. so we recently launched a pin lockout feature so anyone can make sure that their phone isn't downloading apps without a pin. we expanded our app to make sure the phones are child friendly. we added an an droid system so people can flag applications similar to what we are talking about. i would say some of them are trying to make sure that we are always doing more and better to protect children. there have probably been other things we have done. we are constantly trying to correct. >> i think to mr. davidson's point, in the industry we are working to secure the safety and security of our products. because if people lose trust in
a service like facebook, they will stop using it. a timely example is this friday we will be announcing in partnership with microsoft and the national center for missing and exploited children. we will deploy a photo technology that microsoft research developed to identify using a relatively sophisticated fingerprinting technology of pictures of missing and exploited children to help protect children on fact facebook and also find missing and exploited children. we care deeply about all of these problems just as all of you do. >> we need to protect kids from permanent damage. i assume that meant if they had put something on -- out there for people to see, how do you do that if people have already seen it and somebody has already captured that? assuming that kids have access to this way to communicates, how
do you protect them from permanent damage if they have made a decision to put something out there that is damaging? >> thank you for the question. the issue is that the information is not only public when someone puts it up, which is hard to control, but it is persistent. it is hard to take the information down. we talked about in one of our privacy briefings, the concept of an eraser button where it would be easy for somebody who realized that they put out something that they didn't want up there that they could then take it down. >> once you put it up there can't someone else capture it and then they have it? >> yes, that's the problem. >> that's the problem of putting it up there is somebody else can capture it and they have it and they can share it. am i alone in this? >> no, that is the problem. >> i don't know how you stop permanent damage if someone does something that's damaging, unless it just happens that no
one sees it and no one decides they want to use it. it is very care scary -- it is very scary. any of us that have children or grandchildren, it is very scary, but i don't know if we can come up with a fence high enough or big enough to stop that from happening. it does that have terrifying, long-term problem, but if people have access and they put information out there, it is out there. >> there is a industry blossoming that you can pay industries time every month to take down information that is posted about you online. so people are figuring out ways to do it. what we would like to see happening is the companies in this room and elsewhere figure out how to make that amuch, much easier. >> i would add, i know this isn't the most attractive solution, but a huge part of this is about education.
i have young children. i think, you know, a recent report from the national academy talked about some of these problems and said you can try to build a fence about every swimming pool, or you can teach children how to swim. i think we need to teach children how to be lit rat in this new world. >> thank you. >> i didn't mean to sand flipant about hippa. what i was trying to say about hippa is that the bottom line is we had some unintended consequences and costs that came with hipaa. most people that go to the doctors office, they do not read
that long thing they sign on hipaa. you have to add two or three every time you go, which adds administrative costs in thrfment were unin10ed consequences in terms of finding people that have some of the diseases that are unique and rare, trying to find people for research purposes. hipaa has stood in the way of some things that were a problem. that doesn't mean we shouldn't work on privacy. i'm just being caution ri, that we want to be careful as we move forward on privacy, because so much of the success we have had in this space in our country in the internet and in the advance of technology has been remarkable. and i want to make sure we don't have unintended consequences. so whoever a.m. privacy is, i am glad i cleared that up before i ask my questions. i want to make sure everyone understands how easy this is in terms of turning off things. not only do i have the ability
to make sure that i don't have any location services on here. i can even go down, and you tell me every single app that is using location services, and i can individually go to each one and turn each one off. the other thing that you do, you tell me if anyone has used my location in the last 24 hours. there's a little logo that pops up. i tried it. i went on kyack, checked out a flight, and now there is an arrow there to tell me kyack used my current location as i was looking for a flight. now i just have to flip that switch and tell kayak where i am. easy and simple to find right on the page. now here's the thing i wanted to ask ms. novelli and mr. reid. i'm a little confused why cut the rope is on that list. i'm coon confused by paper toss is on the list. it seems to me if we're talking
about games, paper toss is a game -- it was listed in a wall street journal article. all you do -- there is nothing in that app that has anything to do with location other than the fact you are trying to get a piece of paper into a trash can. it is just a game. same thing with cut the rope. so it seems to me if it is obvious by the app there is no need for location, that could be where the industry could focus on making sure people understood the consequences. clearly the only reason cut the rope or toss the paper is tracking my location is to try to sell to other people where i'm going and what i'm doing. there is no politicability -- applicability to the gamy am playing. so when i go on cut the rope, which i tried, and toss the paper, i don't see anything on there that tells me what they are doing as it related to
tracking me. so could you respond to that. >> on games like that, i say no. when it says, can i share your location? i turn it off. for some of us that are building politic that is are ad driven, the thrird-party will ask us for information so they can provide a higher quality app and then that location is part of it. it is interesting to see there are small-town benefits you can see. i can hit a skew and it will tell me the product. it will show me the amazon price. right below that it will tell me tom's hardware store has that same product, it is $3 more, but guess what? it is right across the street. tom didn't have to buy an add to
a major supplier. he can target it. there are benefits to that type of ad marketing. you illustrated the first point more readily. you want to use paper toss, and you don't want to see the ads targeted? turn off location-based services. i think that's something we as an industry understand and expect consumers to do. we have to figure out how we still make money from the ad networks because they control our income from that, so we have to find an agreement with them rather than us as the tail wagging the dog where they agree to the terms you have suggested. >> couldn't you -- i know apple is loathe to do anything to stop the amazing flow of applications that are making their products so desirable. i get that. it seems to me on some of these apps, that if i had a choice you could either get it for free and see some ads or you could pay $2.99 and be ad free and track
free. it seems to me that's a simple consumer choice that the industry could do, both google and apple, and facebook, to the extent it would apply to you, but i think that would go a long way toward consumers beginning to understand, first of all, that when they are being tracked , it helps pay for things. it would drive home the point of what they are getting and how? has there been discussion for that? why haven't you moved toward that kind of modl? >> there are apps 0 not the a -- there are apps on the app store. you have to pay and so there are apps on that now, in terms of the pricing. we have developers set the pricing.
we have not really gotten into trying to set prices. >> people should have the choice whether they want to pay. >> there are those choices on the app store. i don't know if mr. reed wants to comment. >> what you described is exactly what we're doing remember, that's exactly the model we're using. i have one that says "free" next to it. you make a choice which one you like. you can turn off ads after you bought the free version. the bottom line is, it is not clear. i don't understand when i am making that decision, that it
also might involve tracking. that might be something you could do as an industry that might forezall aggressive government regulations. and the next question would be -- the next questioner would be, it says senator udall. >> thank you. i know the chairman isn't here, but i appreciate him holding this hearing and all of you responding tot questions of the panel. as you can see by the questions, there is no doubt in terms of privacy and in terms of protecting minors and that kind of thing. i look forward to your supplemental answers. those are the key questions out there. i think from this subcommittee's perfective, we're going to
continue to do oversight. i think you should expect that. asking research in motion, google and apple, that enable drunk drivers to evade law enforcement. in 2009 drunk drivers killed nearly 10,000 people nationwide, including 141 in new mexico. apps like d.u.i., buzzed, check-pointer, and phantom alert provide drivers with the precise location of d.w.i. checkpoints as they drive. this is while they are driving around. some even offer alerts to drivers as they approach police checkpoints.
while i agree public notification of checkpoints can serve as a deterrent to prevent individuals from making the decision to drive drunk, providing real-time access ability only serves to provide drunk drivers with a tool to break the law at a time when their decision-making capabilities are already impaired. i'm very pleased that r.i.m. did the right thing and immediately pumped these from the blackberry store. why are google and apple still selling d.w.i. apps that encourage breaking the law? i think that question would be directed most to ms. novelli and mr. davidson. >> well, senator, when we received your letter, the first thing we did was try to look
into this. apple of course abhors drunk driving and does not want to in anyway encourage it. what we were looking into is that there were some differences of opinion among reasonable people about whether publicizing checkpoints deters or helps drunk driving. some of the information is actually made public by the police forces themselves and is on the internet. we will continue to look at this issue. we will continue to evaluate it. we do not want to be enabling or supporting drunk driving in anyway. >> i would echo that sentiment. we appreciate the seriousness of the issue.
after initial review, we determined that apps of that sort don't violate the policy at this time. we are evaluating this. we have been talking with your staff, and we appreciate the opportunity to do that. we are tink continuing to look at this. >> as far as apple's stated policy, you have a policy that you don't encourage with your apps, people to break the law. is that correct? >> yes, sir. >> isn't what's happening here -- you have had a letter for two months. you can imagine a person that's drunk, d.u.i., d.w.i., driving down the road, and they have one of these apps turned on and it
issues an alert, tells them there is a checkpoint ahead, then they can use their device to then find a way around the checkpoint. it seems to me that kind of application is encouraging breaking the law. >> well, we're reviewing this. >> you have had two months. how long are you going to review it? >> we will be working with you on this. we are reviewing it. there are some apps, for example. here is a cab number for you to call a cab, alettered you that there are checkpoints, and here's a phonenumber for you to call a taxi. they are not ubi qufment itous all of these apps. as i said, some of the information is made aavailable by the police themselves. reasonable people have different points of view about how to go about this.
we shall trying to do this in the -- we are trying to do this in the most thoughtful manner. >> i hope you understand the difference between the police department, the state police, the county police, sheriff's, whatever, issuing a broad general thing that on friday night or saturday night we're going to have a checkpoint out there at various points in town. that serves as a deterrent, i think, for people to know, even though there is a 2% chance of catching drunk drivers. all of us out on the highways, 2% chance of catching someone. someone utilizing these apps, it may drop to 1% or half a percent. but the important point is, here you have law enforcement issuing
generalized the bulletins, but what people do with your apps is specifically in real time determine there is a checkpoint and evade the checkpoint and possibly afterwards get in an accident and have somebody killed. i understand you are looking at it closely. but i any this is a crucial question from law enforcement . i have heard from the police in las cruces. the attorneys general in delaware and michigan have signed on and are asking the same questions. i thit more this is out there, you will be getting these questions. i'm sorry for running over, but i appreciate your effort for consumer protection and what you are doing in this area is greatly appreciated.
>> senator rubio. >> thank you, guys, for being a part of this. this is timely and interesting. to close the loop on it, on the apple user, there are a lot of apple users in our family. i want other people to hear it as well. the two researchers that appeared to contain the time stamp record. the company, i think, acknowledged that was a glitch and offered updits to fix that. are those updates available already? >> yes, sir. those updates have already been imimplemented for all of the questions. there was one question about incrippings that was going to be added recenty.
by would say there is no actual information about your location at any time. so it is wifi hot spots. not where you were on that map. >> it wasn't by design, the company's position was. even if the toggle switch said no, it was still feeding the information and it was storing it for longer periods of time. >> that update wept out a couple weeks ago, and there -- it is working perfectly now. your information is not backed up to a computer. and the incrippings question is being -- the incrippings -- the incryption question is being addressed.
when they sync their phone, they will say there is an update available, and it just installs on your phone. >> so for anyone who hasn't updated their phone in the last -- >> two weeks. >> should go and update their phone? >> yes. >> the second question has to do with the relationship of third parties. there is some confusion about that because people go to the apple store or android market. when someone buys an application from an online store like that, both from the reality and legality perspective, who is their relationship with, their business relationship? when i go on and get an application for my phone. i think the question is for all of you, because i think facebook does that as well. who do i at that point have the relationship with. who is my relationship with? is it with you, the marketplace, or is it the actual app vendor?
>> once you buy the app and you use it, the first-party relationship is with the app developer. >> we would agree with that. usually there will be terms of service. i think it is why users need to be careful about what applications they use. it is will why we have tried to give people in the marketplace as much information as we can before they install the apps. that's when we lose the relationship. >> a lot of people aren't clear about that. ultimately your business relationship is only as clear as the company that you are interacting with. that's important. here's my secondary question. if i have a problem with an app,
let's say i pull an app, and then i start having problems with these other issues. let's say i'm able to deduce there is a problem. is there a process in place where i can report them to you so that you can investigate them? what's that process? >> users can flag for a variety of reasons. that's the starting point for us. >> we have an ability on our app to contact us. you can flag any concerns you have. we investigate immediately. >> my last question is for facebook. it is about the guy owe location data collected when people check in -- geo-location data collected when people check in.
>> right now the features is designed so you can explicitly share your location with people you choose. so places is not a feature of passively sharing your location. it is about actively sharing your location. you actually click a button that says check in, and that information gezz on your profile. >> how long do you keep that information? >> that information that you shared, like i'm at this restaurant with some friends, that's on your profile as long as you want it to be, and you request remove it at any time. >> if the individual doesn't remove it, it can stay on there at any time? >> yes. we consider it just like you public -- published a status update. you can change both of those after the fact. >> you are probably not shocked some people lie about where they are on there.
but just so people understand they log on and say i'm here, that's going to stay on there forever unless you go back and delete it yourself. >> that's correct. fundamentally, if you decide to share a status update or a photo, we consider that your information not ours. we consider it an imperative to keep that information because you have entrust td on behalf of sharing it with your friends. >> thank you, mr. chairman. we are all encouraged by the substantial growth and wonderful technology that we have in the mobile marketplace. but it does raise questions and concerns about how the vi is impacting consumer protection and privacy. having access to all these things in the palm of your hand
is a wonderful tool, and there is a lot of competition to create the new, best, createest thing which is part of our entrepreneurial spirit in america, but we want to make shoor that when we do it, we do it in a way that appropriately protects consumers online without stifling that information and growth. i want to direct a question, if i might, to mr. davidson. the f.c.c. alleged google violated the f.c.c. act by inappropriately collecting google g-mail information to flood their social network. according to the f.c.c. it led to g-mail users having contact with consumers they had serious concern about. qu respond to google's comments to the f.c.c. on that matter. >> absolutely. as i said in my testimony, we hold ourselves to high standards in adding choice control to our
users. the situation with that product didn't meet our standards. we think we fixed t we have been in a longer conversation with the f.c.c. about it afterwards and then we entered into a consent decree with them. we have agreed that for the next 20 years to put our money or wur mouth is. we signed up for two major things here. one is really instilling privacy by design. a process in our company for making sure that we're thinking about privacy from the earlyest moments, and that is going to be something auditted and assessed by an outside auditor and reported to the f.c.c. for the next 20 years. the second thing is, we have agreed we will get affirmative consent from users from any new sharing of information. another two powerful things, and
those are the things we said we would do and agreed to do, but now we have a consent decree with the f.c.c. >> do you think some of those particulars you talk bd might be a best practices for other companies to consider? >> you know, i think that's something better addressed to other companies. i know there are a lot of different models out there. twe think this is the right thing for google and for our users, so we adopted this with the f.c.c. i'll leave it to other companies to decide what's rights for other companies. >> i'm concerned that if companies agree to implement more restrictive privacy concerns that will are still individuals who will try and hack into local devices and collect user information for third-party users. it seems that mobile devices and apps are far more suceptible to apps and deceptive activities.
has the stri considered how they can make mobile devices and apps similar to how we, you know, protect our home computers with anti-virus software. are we seeing any mobile devices and apps for protection? >> yes. there is a company called "lookout" that provides security and malware detection. apple gives its developers little information on the devices itself. they are very restrictive -- it is more of the wild-wild west. where there is more than a tendency to use the kind of mall
feesans you are talking about. >> first of all, i think there is a huge amount of energy being put in to security. so it is a great question. you will be surprised if i want to characterize it as the wild, wild west. the code is open source. it is actually a major security feature. people around the world are able to assess the code and the system and the security architecture and test it all the time. you don't get security with secrets anymore. you get security with openness. we're among the people where this is being rolled out for the mobile platform. things like making sure there is https, an incription on google. we have added a two-factor
authentication that means if the pass word is not enough, you might need a device and a password. there are a lot of other companies rolling these things out. it is a very important area with a huge amount of research going into it. and research on it. >> is there anything congress can do to help encourage more protection with mobiles and apps or would you rau rather we stay out of it? >> it is a rapidly evoofling -- evolving area for sure. a lot of us would say data breach is an area for consideration. because there are so many state laws.
>> thank you for being here. i want to thank all the panelists for being here today. i know when you look at the pleasantness scale. sometimes going before the senate it is way down here. thank you for being here, and thank you for testifying. as much as we talked about today, we covered a lot of issues, i feel like we are still at the tip of the iceberg here. there is a lot more here to know and learn and for us to wade through. we appreciate your input and help as we go through this. we will leave the record open for two weeks. i'm certain we'll have additional questions and follow-ups. we'll leave that open for two weeks. we would appreciate you-all working with the staff and getting it back to us in a timely manner. thank you for being here, and we're adjourn the hearing. >> thank you.
>> you can find this hearing online at the c-span video library along with information about senator rockefeller's do not track bill. and a lank to the wall street application on apps. just go to c-span.org. >> tonight on c-span's road to the white house, her man kane kicks off his -- her man cain kicks off his campaign in atlanta, georgia. you can see the former federal reserve chief of the bank here on c-span, c-span.org, and the
c-span video library. >> from today's "washington journal" a look at south carolina reas' proposal to make gold and legal coins legal tender. at the table, ralph benko , a senior economic adviser to a group called america principles in action. the topic is something we have not talked much about, the gold standard. specifically, a conservative push to return this country to a gold standard. before we get to your actual opinion, educate us on what the gold standard is and where has the country been on an issue. guest: when america had its original regulation, the founding ponders -- fathers
issued continental money which issued continental money which dropped to value le less. they strip that right out of the constitution. with the exception of a short period during the civil war, because war always destroy is the gold standard, we had that creating jobs and economic growth until 40 years ago when richard nixon finally took a softer gold standard, promising us some more jobs. host: why ever turn now? guest: the strongest reason is 20 million jobs. a strong dollar, which is what the gold standard does in a gentle an organic way, is one of the greatest methods of protecting jobs. under reagan, used a proxy for the gold standard, he was able
decreed 19.4 million jobs by lowering tax rates and strengthening the dollar. since then we have seen the dollar appreciating and how you and getting weaker. we have been losing jobs along with that. the one thing the president obama really needs the most, 20 million new jobs, exactly what the gold standard would bring to the united states. host: let's put the phone numbers at the bottom of the screen for our guests. the topic is what is being written now, a conservative push for the gold standard. mr. benko, it is not just people and groups, but states are active in certain areas. talk about what some of the states have been up to. states have been up to. guest: utah has just passed legislation recognizing gold and silver as legal tender. legislation introduced in about 13 states, and this is the end of the state legislative cycle. we will see it coming back next
year. we expect to see it in iowa, where there is a bill pending in the senate. we expect to see it in new hampshire and a number of other states. this is a distress call, saying, washington, you are not getting host: it so someone would walk into a store and buy something? it's paper or electronic. guest: under the gold standard, under the international gold standard, if you would not notice any difference whatsoever. when my father was a young man, he could get a $20 bill and it would give him a one an ounce gold coin. that money set gold certificate. when i was a young man, i could walk in with a silver certificate and it would give me a that silver dollar and returned. no one is walking around with gold coins under the gold standard. they are heavy and inconvenient. but the legal right to convert
your money into gold makes the money retain its value. paper money inevitably depreciates its value. nixon says specifically coming toward dollar will buy as much tomorrow as it does today. the not -- that $2,011 is worth 19 cents compared to the $1,971. 19 cents compared to the $1,971. the 2001 $1 is worth 19 cents compared to the 1971 $1. host: you mentioned the potential of millions of jobs. how would it make the broader economy stronger? guest: in addition to american principles and action, i am also
the editor of the london institute website for people they want to read more about that. api has a website that i also strongly represent -- recommend. it's better to say let's go forward it to the gold standard, forward it to the gold standard, because it is very bored- looking. the facts are indisputable. people who promised us the paper standard would be better, more jobs, more growth, more infrequent recession, but in these 40 years, we have seen slower growth, less job creation, more unemployment, or frequent recessions, and sharper and deeper recessions including the panics like we had in 2008, very consistent with a pure paper money standard. money is managed by civil servants, the chairman of the
federal reserve. their well-being people -- well meaning people. host: before we get the calls, a little bit of push back from someone who rode in slate. guest: i read that article. host: the government would have to decide what the price of gold is. it is a lot harder than it sounds. in theory, it would -- there is an ideal rate at which to pay currency against gold. which is to know what it is. it is the taurus lead volatile. it is doubled over the last two years. if the federal reserve were to simply fix the dollar to a price of gold on a given day, and demand for gold changed drastically, it would guest: wreak havoc he is right. but the markets are very capable of getting this right.
by announcing that we're going to restore convertibility at a date certain in the future, then the markets will arbitrage the price. price. they will figure out the natural clearing price and the government would pay get to that price. host: how many more states to use the acting on this? we talked about a couple. guest: a lot of votes of no confidence in washington, with qe1 and qe2. people feel that they are running the printing presses over time. american principles in action is actually developing a model legislation which it will offer to the exchange council for states to consider how best to go about implementing this legislation. host: you can read more at the
website. our guest is ralph benko, the senior economic adviser for that group. he is more than 20 years experience and campaign in government service and technology areas. a lot more that we can get to. orlando, florida it is our first call. david, a republican. caller: thank you for taking my call. i thought it was franklin roosevelt it took a softer gold standard. and nixon took a softer silver standard. -- took us off the silver standard. it says that congress should be responsible for coining money and determining the value thereof. how does this relate to the creation of the federal reserve? guest: first of all, we got off the gold standard in stages.
franklin delano roosevelt took a soft the domestic gold standard in 1932 and made it illegal for americans to own gold. but we were still on the international gold standard until lyndon johnson took a soffit in 1968, and legally nixon repudiated the cold standard in 1971. maybe more history than you wanted to know. there are compelling legal arguments that this is not constitutional. i am a constitutional lawyer, called by the treasury department to testify before the gold constitute -- cold commission about the history of monetary policy. a long and rich history, and it is crystal clear whether you read the debates when there were writing the constitution in 1787, look up the notes of 1787, look up the notes of debate, and you can read it for
yourself or go to the gold standard website and search their. there is a blog entry about that. one of the founders said that the -- give the federal government power of issuing paper money, it would be as alarming as the mark of the beast in revelations. they were strongly against this power. george washington wrote against it, james madison wrote against it in federalist paper no. 44. the constitutional history is very wrong that the founding fathers intended no paper money. that is how we conducted our affairs very successfully for 150 years. host: david is on the line for ralph benko. caller: i beg to the gentleman
the would-i beg to differ with the gentleman that we conducted our affairs so well. there were crashes so often. this country got started on publicly managed paper money. during the revolutionary war, what that gentleman forgets to mention is that the briton -- the british were i tacking us with a massive counterfeiting operation. he forgets them mention the greenback which carried the union through the civil war. this father -- this country has never had a true publicly managed money system. guest: on the history of the experience of the revolutionary war, i read their own language. they were traumatized by. they detested paper money. in everything i have read, it is said by the founders, none of them said, it would've worked
great except the british had been counterfeiting so heavily. there was a wonderful article in 1863 in the civil war, and i forgot to mention -- i did mention that america win off the gold standard during the civil war. and i always said the war is the destroyer of the gold standard. that was an allusion to the greenback, which have their own interest in history. it's quite clear to me and the statistics around at continental is that the continental congress flooded the country and it dropped by a thousand to one. host: another point, the effect of the gold standard. we had many depressions. guest: i read this very differently. paul krugman attacked the gold
standard in his "york times" blog. the only attested to one panic, i think it was 1893. it's interesting to me that he had to reach back that far. there is a famous scholar going on to public service, ben bernanke, and writing about this very subject as to whether the gold standard was the cause of the great depression, in an article that he cove road in about 1993, he said that it was a to form a version of the gold standard which cause the great depression, which was exactly right. he also spoke as a governor before he came -- became the chairman, speaking about how well the gold standard at work. host: woodstock, va., is calling. calling. caller: my question to you, who
is opposed to implementing the gold standard in america? and if it is not too complicated, what is your vision of how this would be implemented? guest: two excellent question. congress is very recalcitrant about this. it's not too hard to understand why. and in referencing that to the previous caller, what the proponents of gold standard, the people's money, not money managed by a small group of people. you have the power to go in and get gold from a bank if you do not believe that the treasury is is doing the right amounts of paper money in it will depreciate and inflation will come. congress will have to be pushed into this kicking and screaming, and so will wall street. this is like a credit card for
congress. if congress is spending money like a drunken sailor. there are only three ways that congress gets his hands on our money. taxing, borrowing, and printing. and the printing press, a phor ore creation of book-entry dollars, is probably the worst, because it leads to the depreciation of the dollar which is working guys like me particularly hard. host: you mentioned the gold commission. you testified before, and one man, ron paul, who served on it. guest: and there were others. host: ron paul has run for president. he has made this a political question. will we hear about this and the next guest: year-and-a-half we
will, because we are collaborating with the idea what tea party in a bus tour to 17 different locations in iowa. we're training people to participate in the ames straw poll. it is bringing issues to the four and this is not just a conservative issue. people like michael kinsley, a very wise and humanitarian progressive, have written in the manic monthly -- the atlantic monthly very good things about the gold standard. i do not represent the ebenezer scrooges institute or the scrooge mcduck institute. we want to take the privileges away from washington and wall street and turn them over to the people for good job creation. that is the major benefit.
know how'll let to much -- i would like to know how much gold is this gentleman much gold is this gentleman holding in his own personal account, or how much called is the group holding in their investment accounts? it would be very telling to find out how much you are holding. since you are advocating the gold standard. gold standard. guest: can we get the cards up. there are my holdings, 100%. host: why is that important to the discussion? caller: he is advocating for a net return to the gold standard. off the top of my head, i was wondering how much he was holding.
i would assume that his investments would go up significantly if the entire u.s. economy would switchover. one more question before i go? you're also educating for individual states leaving behind the federal government. do you think it would be beneficial for the united states economy in its current state with our currency being devalued against the euro? guest: i am not an investor. i am a working guy. i do not have any gold investments at all. i hate to shock you, but if we go to the gold standard, gold will likely stabilize near its current price. if we do not, it is highly likely that goal will go to the moon.
if they were looking to stoke the price of gold, i would attack the dollar and praising the paper dollar and not moving toward gold convertibility. congress will have to be pushed into this. there are 3 or four major outside forces. this takes away congresses credit card. congress is like a drunk. no matter how much they swear to lay off of hooch, there's no better way than just locking the medicine cabinet. this is one way to move congress. encouraging the tea party to take this up and to bring it to the floor is another way of moving congress and also the presidential candidates.
other countries who are heartsick at watching the way america is abusing the dollar in a misguided effort to improve the trade balance or whatever are also eventually going to get off their fdr ride, even tim geithner says that the practical option. other countries will tumble to that. there will be pressure on congress to let us block the liquor cabinet from the people, from the states, and their allies. host: 50 minutes left with our guest. -- 15 minutes left with our guests. caller: to what extent would the benefits of a gold standard be frustrated by the practice of fractional reserve banking? guest: that is a wonderful question, not at all.
adam smith wrote about this. "wealth of nations." he addressed fractional reserve from the gold standard. this recommendation was that we create 20% gold reserve. it is like an insurance policy. insurance companies don't keep one of the present time reserves against it every house in the country burned down at the same time. if they keep sam reserves. we believe the federal government in combination with the people is better capable of assessing than we are. we are not saying exactly what the reserve should be. at the head of its credibility, the bank of england which was then the central monetary agent in the world and now the federal reserve is, only kept about 5% on reserves against currency. on reserves against currency. until the federal reserve re-
earns credibility, it will require something more like 30% or 40% but that is way above my pay grade. host: in addition to what we have been talking about, one viewer writes fri-- there's this idea is to pay the country's debt. guest: what a terrible idea. host: how much gold is there in fort knox? guest: the official gold reserves of the u.s. is about 8,000 tons for it is roughly four times as much as germany and they are number 2. host: how much money with that represent? guest: role hundred billion dollars. -- several hundred billion
dollars. dollars. mr. lehrman spoke about this. mr. lehrman spoke about this. he talked about how america might be a net buyer of gold for a while. that would not bring in a rich material amount of money to reduce the deficit. it would be non-recurring. my own personal assessment is it is not a good idea. host: madison, indiana, republican, good morning. caller: will it create a tremendous devaluation of the dollars we have now?
there are so many dollars in the money supply and only some of the gold. wood in it leads to a devaluation? guest: doing it right is really critical. after the civil war, the federal government went back to the gold standard in a way that upped the value of the dollar and caused a long recession it created a prairie populist movement. this is where william jennings bryant said you shall not press down this crown of thorns and crucified man kind across a cross of gold. and winston churchill made the biggest blunder of his political career by resuming the gold standard which had been factored in by world war i. it created a massive recession. it is why it is so important to assess -- for the market to assess what the gold value will be so we will neither have deflationary or inflationary and it will stop eroding.
host: this is an e-mail --. guest: this is the counter argument to gold and that is without gold, the government can't bail out wall street and cannot bail out the banks and cannot be allowed detroit. from my analysis of the historical and the empirical evidence, it is the instability of the paper dollar that causes the crisis in the first place. the patient is not responding, let's give her more crack and it
was cracked in the first place because the crisis. let's get off this cycle of volatility and for it's something that is gentle, organic, and stable. this is so we don't put ourselves in a situation where we have these crises and congress get involved in the bailout business which i think is bad business. host: another viewer wants to know about jobs. they should have written 20 million jobs. what specifically are these jobs what specifically are these jobs that will get created tax ? guest: you have heard of warned of that and there's a comparable figure in mexico who wrote a wonderful paper called "gold - job generator and job protector."
i am paraphrasing -- you can look this up on the web. it is compelling. free trade implies a gold standard. right now, we are buying all the toys in china. in return for which, we get all the toys and china is getting the toy factories and the factory jobs and the dollars. i am in favor of china achieving prosperity. but we don't want them to be achieving some kind of austerity prosperity were they are making all this money by not spending it. we are spending all this money and not making it. and not making it. under the gold standard, we can restore our industrial base so we have really good height- paying jobs, not just mcjobs but really good jobs and bring them to the fore. it would inject -- restoring our
industrial base is one thing the gold standard would do. the balance in trade with automatic rectify and we would no longer be a sport -- exporting our best jobs. host: will bar, maryland, go ahead. caller: and we have a 585 trillion dollar value in over- the-counter derivatives. deleverage on that is 1-40 so i would like to ask how in the world, when you are all anti- government, this amount of money -- our government -- our debt is a piddling amount compared to this. how can the world would you
tackle that by going back to the gold standard? >guest: i am a conservative but i am not anti-government. the tea party is not anti- government. the court the most authentic tea party group called tea party patriots. we have three doctrines as tea party patriots and one is fiscal restraint, meaning reduce the wasteful spending. number two is free market because the free market is the way of creating real jobs and number three is constitutional integrity. we are not anti-government. as for the derivatives, i main street guy. i recognize their is a lot of weird paper out there. i don't understand it and and i'm not sophisticated that way. i know that real companies generating real jobs with real
stock in value on the stock market is the core of our prosperity. there needs to be a respect the relationship between the federal government and the private economy. the federal government right now is number 1 running riot and allowing wall street to run riot. i am not a big fan of these derivatives traders. this is about bringing the american economy and its fundamental basis, our money, back into our heads and our control and cutting of the government's ability to manipulate. host: speak to us about your perspective of the gold standard on other countries. guest: there is a number of important developing countries that we have nicknamed the bric. brazil, russia,